Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking statements

Certain information and statements included in this quarterly report on Form 10-Q, including, without limitation, statements containing the words “forecast,” “guidance,” “goals,” “projects,” “estimates,” “anticipates,” “believes,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” “targets,” or “will,” or the negative of those words or similar words, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, results of operations, and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by the forward-looking statements, including, but not limited to, the following:

Operating factors, such as a failure to operate our business successfully in comparison to market expectations or in comparison to our competitors, our inability to obtain capital when desired or refinance debt maturities when desired, and/or a failure to maintain our status as a REIT for federal tax purposes;
Market and industry factors, such as adverse developments concerning the life science, agtech, and technology industries and/or our tenants;
Government factors, such as any unfavorable effects resulting from federal, state, local, and/or foreign government policies, laws, and/or funding levels;
Global factors, such as negative economic, social, political, financial, credit market, and/or banking conditions;
Uncertain global, national, and local impacts of the ongoing COVID-19 pandemic; and
Other factors, such as climate change, cyber intrusions, and/or changes in laws, regulations, and financial accounting standards.

This list of risks and uncertainties is not exhaustive. Additional information regarding risk factors that may affect us is included under “Item 1A. Risk factors” and “Item 7. Management’s discussion and analysis of financial condition and results of operations” of our annual report on Form 10-K for the year ended December 31, 2022 and under respective sections within this quarterly report on Form 10-Q. Readers of this quarterly report on Form 10-Q should also read our other documents filed publicly with the SEC for further discussion regarding such factors.

Overview

We are a Maryland corporation formed in October 1994 that has elected to be taxed as a REIT for federal income tax purposes. Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500® company, is a best-in-class, mission-driven life science REIT making a positive and lasting impact on the world. As the pioneer of the life science real estate niche since its founding in 1994, Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative life science, agtech, and advanced technology campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. The trusted partner to approximately 825 tenants, Alexandria has a total market capitalization of $30.6 billion and an asset base in North America of 74.9 million SF as of June 30, 2023, which includes 41.1 million RSF of operating properties and 5.3 million RSF of Class A/A+ properties undergoing construction, 9.4 million RSF of near-term and intermediate-term development and redevelopment projects, and 19.1 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in life science, agtech, and advanced technology campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, agrifoodtech, climate innovation, and technology companies through our venture capital platform. We believe our unique business model and diligent underwriting allow us to attract a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

As of June 30, 2023:

Investment-grade or publicly traded large cap tenants represented 49% of our total annual rental revenue;
Approximately 96% of our leases (on an annual rental revenue basis) contained effective annual rent escalations approximating 3.0% that were either fixed or indexed based on a consumer price index or other index;
Approximately 93% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent; and
Approximately 94% of our leases (on an annual rental revenue basis) provided for the recapture of capital expenditures (such as HVAC maintenance and/or replacement, roof replacement, and parking lot resurfacing) that we believe would typically be borne by the landlord in traditional office leases.

Our primary business objective is to maximize long-term asset value and stockholder returns based on a multifaceted platform of internal and external growth. A key element of our strategy is our unique focus on Class A/A+ properties located in collaborative life science, agtech, and advanced technology campuses in AAA innovation clusters. These key campus locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space. They generally represent highly desirable locations for tenancy by life science, agtech, and technology entities because of their close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses. Our strategy also includes drawing upon our deep and broad real estate, life science, agtech, and technology relationships in order to identify and attract new and leading tenants and to source additional value-creation real estate.

Executive summary

Operating results


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income attributable to Alexandria’s common stockholders – diluted:
In millions	$	87.3	$	269.3	$	162.5	$	118.5
Per share	$	0.51	$	1.67	$	0.95	$	0.74
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions	$	382.4	$	338.8	$	756.1	$	663.4
Per share	$	2.24	$	2.10	$	4.43	$	4.15

For additional information, refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” in the “Non-GAAP measures and definitions” section within this Item 2.

An operationally excellent, industry-leading REIT with a high-quality/diverse client base of approximately 825 tenants to support growing revenues, stable cash flows, and strong margins


Percentage of total annual rental revenue in effect from investment-grade or publicly traded large cap tenants	49		%

Sustained strength in tenant collections:
Tenant receivables as of June 30, 2023	$	7.0		million
July 2023 tenant rent and receivables collected as of the date of this report	99.7		%
Tenant rent and receivables for the three months ended June 30, 2023 collected as of the date of this report	99.9		%

Occupancy of operating properties in North America as of June 30, 2023	93.6		%
Adjusted EBITDA margin	70		%	(1)

Weighted-average remaining lease term as of June 30, 2023:
Top 20 tenants	9.4			years
All tenants	7.2			years

(1)For the three months ended June 30, 2023.

Continued strong leasing volume and rental rate increases with weighted-average terms of 13.0 years and 9.5 years for the three and six months ended June 30, 2023, respectively.

Solid leasing activity continued during the three months ended June 30, 2023 with leasing volume aggregating 1.3 million RSF, 77% of which was generated from our client base of approximately 825 tenants.
Annualized leasing volume of 5.1 million RSF for the six months ended June 30, 2023 in line with solid pre-COVID leasing volume.


	June 30, 2023
	Three Months Ended	Six Months Ended
Total leasing activity – RSF	1,325,326	2,548,753
Lease renewals and re-leasing of space:
RSF (included in total leasing activity above)	1,052,872	2,172,910
Rental rate increase	16.6%	35.1%
Rental rate increase (cash basis)	8.3%	17.9%

Continued strong net operating income and internal growth

Total revenues:
$713.9 million, up 10.9%, for the three months ended June 30, 2023, compared to $643.8 million for the three months ended June 30, 2022.
$1.4 billion, up 12.4%, for the six months ended June 30, 2023, compared to $1.3 billion for the six months ended June 30, 2022.
Net operating income (cash basis) of $1.8 billion for the three months ended June 30, 2023 annualized, increased by $178.3 million, or 11.1%, compared to the three months ended June 30, 2022 annualized. Refer to “Net operating income, net operating income (cash basis), and operating margin” in the “Non-GAAP measures and definitions” section within this Item 2 for a reconciliation of our net income to net operating income (cash basis).
Same property net operating income growth:
3.0% and 4.9% (cash basis) for the three months ended June 30, 2023, compared to the three months ended June 30, 2022.
3.4% and 6.5% (cash basis) for the six months ended June 30, 2023, compared to the six months ended June 30, 2022.
96% of our leases contain contractual annual rent escalations approximating 3%.

Alexandria’s banking syndicate continues to support our world-class brand, differentiated business model, and laboratory space market dominance

In June 2023, we increased the aggregate commitments available for borrowing under our unsecured senior line of credit to $5.0 billion from $4.0 billion. The increase was 1.7x oversubscribed, and we added one new banking relationship.

Continued strong and flexible balance sheet with 13.4 years of remaining term of debt and no debt maturities prior to 2025

Investment-grade credit ratings ranked in the top 10% among all publicly traded U.S. REITs.
$6.3 billion of liquidity.
No debt maturities prior to 2025.
13.4 years weighted-average remaining term of debt.
99.2% of our debt has a fixed rate.
Net debt and preferred stock to Adjusted EBITDA of 5.2x, matching our second-lowest level in Company history, and fixed-charge coverage ratio of 4.7x for the three months ended June 30, 2023 annualized.
Total debt and preferred stock to gross assets of 27%.
$1.3 billion of expected capital contributions from existing real estate joint venture partners from July 1, 2023 through 2026 to fund construction.

Continued strong and increasing dividends with a focus on retaining significant net cash flows from operating activities after dividends for reinvestment

Common stock dividend declared for the three months ended June 30, 2023 was $1.24 per common share, aggregating $4.84 per common share for the twelve months ended June 30, 2023, up 24 cents, or 5%, over the twelve months ended June 30, 2022.
Dividend yield of 4.4% as of June 30, 2023, based on a closing stock price on June 30, 2023 of $113.49 and the annualized dividend declared for the three months ended June 30, 2023 of $1.24 per common share.
Dividend payout ratio of 55% for the three months ended June 30, 2023.
Average annual dividend per-share growth of 6% from 2019 to the three months ended June 30, 2023 annualized.

Focused execution on harvesting value from our asset recycling program

Our $1.85 billion capital plan for 2023 is focused on the enhancement of our asset base through the sale of non-core properties and/or properties not integral to our mega campus strategy and comprises (in millions):


	Completed During June 30, 2023		Expected Completion During Second Half of 2023
Dispositions of 100% interests in properties with strong capitalization rates	$	603	$	—
Strategic partial interest sales	98		—
Executed and pending transactions subject to signed letters of intent or purchase and sale agreements	—		175
Additional targeted non-core dispositions in process	—		874
Proceeds of forward equity sales agreements entered into during 2022	—		100
Completed and pending transactions	$	701	$	1,149
Total 2023 capital plan	$1,850

External growth and investments in real estate

Alexandria’s highly leased value-creation pipeline delivers annual incremental net operating income of $58 million commencing during the three months ended June 30, 2023 and drives future annual incremental net operating income aggregating $605 million.


(dollars in millions)	Incremental Annual Net Operating Income		RSF	Project Leased Percentage
Placed into service(1):
Three months ended March 31, 2023	$	23	453,511	100	%
Three months ended June 30, 2023	58		387,076	100	%
Six months ended June 30, 2023	$	81	840,587	100	%

Expected to be placed into service and stabilized(2):
Second half of 2023	$	150	1,175,382	99	%
2024	127		1,842,713	90
Second half of 2023 through fourth quarter of 2024	277		3,018,095	94

First quarter of 2025 through second quarter of 2026	328		3,695,763	43
	$	605	6,713,858	70	%	(3)

(1) Annual net operating income (cash basis) is expected to increase by $38 million upon the burn-off of initial free rent from recently delivered projects, which has a weighted-average burn-off of three months.

(2) Refer to the “New Class A/A+ Development and Redevelopment Properties: Current Projects” section within this Item 2 for additional details.

(3) 77% of the leased RSF of our value-creation projects was generated from our client base.

Strong balance sheet management

Key metrics as of June 30, 2023

$30.6 billion in total market capitalization.
$19.4 billion in total equity capitalization, which ranks in the top 10% among all publicly traded U.S. REITs.


	June 30, 2023		Goal for Fourth Quarter of 2023 Annualized
	Quarter Annualized	Trailing 12 Months
Net debt and preferred stock to Adjusted EBITDA	5.2x	5.4x	Less than or equal to 5.1x
Fixed-charge coverage ratio	4.7x	4.9x	4.5x to 5.0x

Key capital events

In June 2023, we amended our unsecured senior line of credit to increase the aggregate commitments available for borrowing to $5.0 billion from $4.0 billion while maintaining the existing borrowing rate and maturity date.
In July 2023, we increased the aggregate amount we may issue from time to time under our commercial paper program to $2.5 billion from $2.0 billion.

Investments

As of June 30, 2023:
Our non-real estate investments aggregated $1.5 billion.
Unrealized gains presented in our consolidated balance sheets were $251.3 million, comprising gross unrealized gains and losses aggregating $373.3 million and $122.0 million, respectively.
Investment loss of $78.3 million for the three months ended June 30, 2023, presented in our consolidated statements of operations, consisted of $77.9 million of unrealized losses and reclassifications, and $371 thousand of realized losses.
Investment loss of $123.4 million for the six months ended June 30, 2023, consisted of $143.8 million of unrealized losses and reclassifications, and $20.4 million of realized gains.

Other Key highlights

Nareit Investor CARE Gold Award winner

We received the 2023 Nareit Investor CARE (Communications and Reporting Excellence) Gold Award in the Large Cap Equity REIT category for superior shareholder communications and reporting. Our most recent award contributes to an impressive milestone of our sixth consecutive Nareit Investor CARE Award, our seventh Gold award, and our eighth overall award since 2015, positioning us as the equity REIT with the most Gold awards. These recognitions are directly attributed to our world-class team’s operational excellence in upholding the highest levels of transparency, integrity, and accountability to our stockholders.

Industry and ESG leadership: catalyzing and leading the way for positive change to benefit human health and society

In June 2023, Alexandria released our 2022 ESG Report, which highlights our longstanding and continued leadership in ESG. The report details the advancement of our decarbonization strategy and our roadmap to climate resilience within our life science real estate asset base. It also showcases Alexandria’s comprehensive efforts to catalyze the health, wellness, safety, and productivity of our employees, tenants, local communities, and the world through the built environment and beyond, including through our visionary social responsibility initiatives. Notable ESG initiatives and achievements include the following:
We continue to further our approach to net zero by developing an innovative greenhouse gas emissions mitigation strategy that includes reducing emissions from the operation of our real estate assets through electrification, energy efficiency, and renewable electricity.
We have proactively taken steps to incorporate electrification into some of our development projects, including at 230 Harriet Tubman Way on our Alexandria Center® for Life Science –Millbrae campus in our South San Francisco submarket.
We look for opportunities to utilize alternative energy sources, such as geothermal energy. In our Greater Boston region, our 325 Binney Street development, Moderna’s new HQ and core R&D operations, is designed to be the most sustainable laboratory building in Cambridge, and our 15 Necco Street development is a state-of-the-art low-carbon laboratory building for Eli Lilly. 325 Binney Street and 15 Necco Street are targeting a 92% and 74% reduction in fossil fuel use, respectively.
We also continue to increase our consumption of renewable electricity. With our new solar power purchase agreement to take effect in our Greater Boston region in 2024, 100% of the electricity consumed by Greater Boston will be from renewable electricity, assuming 2022 levels of use for Alexandria-paid utility accounts.
Pursuing Zero Energy certifications for two projects: 325 Binney Street, which is targeting LEED Zero Energy certification and is designed to be the most sustainable laboratory building in Cambridge, and 685 Gateway Boulevard in our South San Francisco submarket, which is designated as Zero Energy Ready and is on track to achieve ILFI Zero Energy certification.
In our Lake Union submarket, Alexandria received the 2023 BOMA Pacific Northwest TOBY (The Outstanding Building of the Year) Award in the Corporate Facility category for 1165 Eastlake Avenue East on The Eastlake Life Science by Alexandria mega campus. The TOBY Awards honor and recognize quality in commercial buildings and reward excellence in building management.

(1)Reflects current score for Alexandria and latest scores available for the FTSE Nareit All REITs Index companies from Bloomberg Professional Services as of June 30, 2023.

(2)Reflects current score for Alexandria and latest scores available for the FTSE Nareit All REITs Index companies on ISS’s website as of June 30, 2023.

Environmental data for 2022 reflected in the chart above received independent limited assurance from DNV Business Assurance USA, Inc. The Independent Assurance Statement from DNV is available at www.are.com/esg.html.

(1)2025 environmental goals relative to a 2015 baseline on a like-for-like basis for buildings in operation that Alexandria directly manages. The carbon emissions reduction goal relates to our Scope 1 and Scope 2 emissions.

(2)2025 environmental goal for buildings in operation that Alexandria indirectly and directly manages.

Operating summary


Historical Same Property Net Operating Income Growth			Historical Rental Rate Growth: Renewed/Re-Leased Space










Margins(2)			Favorable Lease Structure(3)
Operating	Adjusted EBITDA		Strategic Lease Structure by Owner and Operator of Collaborative Life Science, Agtech, and Advanced Technology Campuses
70%	70%		Increasing cash flows
	Percentage of leases containing annual rent escalations			96%
		Stable cash flows
Weighted-Average Lease Terms of Executed Leases		Percentage of triple net leases			93%
			Lower capex burden
8.4 years	8.6 years		Percentage of leases providing for the recapture of capital expenditures			94%

2019 to 1H23	2014 to 1H23
Net Debt and Preferred Stock to Adjusted EBITDA(4)			Fixed-Charge Coverage Ratio(4)

Refer to “Same properties” and “Non-GAAP measures and definitions” within this Item 2 for additional details. “Non-GAAP measures and definitions” contains the definition of “Net operating income” and its reconciliation from the most directly comparable financial measure presented in accordance with GAAP.

(1)The 10-year average represents the average for the years ended December 31, 2013 through 2022.

(2)Represents percentages for the three months ended June 30, 2023.

(3)Percentages calculated based on annual rental revenue in effectas of June 30, 2023.

(4)Quarter annualized. Refer to the definitions of “Net debt and preferred stock to Adjusted EBITDA” and “Fixed-charge coverage ratio” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details.


Long-Duration and Stable Cash Flows From High-Quality and Diverse Tenants

REIT Industry-Leading Tenant Client Base
Investment-Grade or Publicly Traded Large Cap Tenants

90%						49%
of ARE’s Top 20 Tenants Annual Rental Revenue(1)						of ARE’s Total Annual Rental Revenue(1)

Long-Duration Lease Terms
9.4 Years						7.2 Years
Top 20 Tenants						All Tenants
Weighted-Average Remaining Term(2)


Sustained Strength in Tenant Collections(3)

99.9%
For the Three Months Ended June 30, 2023

99.7%
July 2023

(1)Represents annual rental revenue in effect as of June 30, 2023. Refer to the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(2)Based on total annual rental revenue in effect as of June 30, 2023.

(3)Represents the portion of total receivables billed for each indicated period collected through the date of this report.


High-Quality and Diverse Client Base in AAA Locations

Industry Mix of Approximately 825 Tenants(1)

	Industry		Annual Rental Revenue(4) per RSF
	Life Science Product, Service, and Device		$	42.39
	Multinational Pharmaceutical		$	60.88
	Public Biotechnology – Approved or Marketed Product		$	60.29
	Institutional (Academic/Medical, Non-Profit, and U.S. Government)		$	57.74
	Public Biotechnology – Preclinical or Clinical Stage		$	69.46
	Private Biotechnology		$	81.49
	Investment-Grade or Large Cap Tech		$	35.89
	Future Change in Use(2)		$	40.63
	Other(3)		$	34.39
Percentage of ARE’s Annual Rental Revenue(4)

Solid Historical Occupancy of 96% Over Past 10 Years(5) From Historically Strong Demand for Class A/A+ Properties in AAA Locations

AAA Locations		Occupancy Across Key Locations



Percentage of ARE’s Annual Rental Revenue(4)

Represents annual rental revenue in effect as of June 30, 2023. Refer to the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(1)During the three months ended June 30, 2023, our tenant count declined from over 850 tenants to approximately 825 tenants primarily due to dispositions of non-core properties and/or properties not integral to our mega campus strategy.

(2)Represents annual rental revenue currently generated from space that is targeted for a future change in use, including 1.1% of total annual rental revenue that is generated from covered land play projects. The weighted-average remaining term of these leases is 3.8 years.

(3)Our “Other” tenants, which represent an aggregate of 3.0% of our annual rental revenue, comprise technology, professional services, finance, telecommunications, and construction/real estate companies, and (by less than 1.0% of our annual rental revenue) retail-related tenants.

(4)Represents annual rental revenue in effect as of June 30, 2023.

(5)Represents average occupancy of operating properties in North America as of each December 31 for the last 10 years and as of June 30, 2023.

(6)Acquired vacancy of 2.2% from properties recently acquired in 2021 or 2022 primarily representing lease-up opportunities.

Leasing

The following table summarizes our leasing activity at our properties:


	Three Months Ended			Six Months Ended		Year Ended
	June 30, 2023			June 30, 2023		December 31, 2022
	Including Straight-Line Rent		Cash Basis	Including Straight-Line Rent	Cash Basis	Including Straight-Line Rent	Cash Basis
(Dollars per RSF)
Leasing activity:
Renewed/re-leased space(1)
Rental rate changes	16.6%	(2)	8.3%	35.1%	17.9%	31.0%	22.1%
New rates	$37.70		$36.43	$50.61	$48.51	$50.37	$48.48
Expiring rates	$32.32		$33.65	$37.47	$41.15	$38.44	$39.69
RSF	1,052,872			2,172,910		4,540,325
Tenant improvements/leasing commissions	$36.65			$26.31		$27.83
Weighted-average lease term	13.0 years			9.5 years		5.0 years

Developed/redeveloped/ previously vacant space leased(3)
New rates	$64.23		$61.04	$57.44	$54.78	$73.46	$64.04
RSF	272,454			375,843		3,865,262
Weighted-average lease term	10.8 years			10.6 years		11.8 years

Leasing activity summary (totals):
New rates	$43.15		$41.49	$51.62	$49.44	$60.98	$55.64
RSF	1,325,326			2,548,753		8,405,587
Weighted-average lease term	12.2 years			9.7 years		8.1 years

Lease expirations(1)
Expiring rates	$37.57		$34.47	$40.93	$41.86	$37.41	$38.06
RSF	1,520,468			3,533,295		6,572,286

Leasing activity includes 100% of results for properties in which we have an investment in North America.

(1)Excludes month-to-month leases aggregating 82,025 RSF and 266,292 RSF as of June 30, 2023 and December 31, 2022, respectively. During the trailing twelve months ended June 30, 2023, we granted free rent concessions averaging 0.5 months per annum.

(2)During the three months ended March 31, 2023, Alexandria’s rental rate growth was driven by lease renewals and re-leasing of space located in the Greater Boston, San Francisco Bay Area, and Seattle markets. Alexandria’s rental rate growth for the three months ended June 30, 2023 was driven by renewals and re-leasing of space located in the Seattle, Maryland, and Research Triangle markets. Quarterly rental rate growth for lease renewals and re-leasing of space can be significantly skewed by a small number of leases or mix of leases (by submarket or property) executed in any quarter.

(3)Refer to the “New Class A/A+ development and redevelopment properties: summary of pipeline” section within this Item 2 for additional information on total project costs.

Summary of contractual lease expirations

The following table summarizes information with respect to the contractual lease expirations at our properties as of June 30, 2023:


Year			RSF		Percentage of Occupied RSF			Annual Rental Revenue (per RSF)(1)			Percentage of Total Annual Rental Revenue
	2023	(2)		1,160,920		3.0	%		$	43.23		2.5	%
	2024			3,475,475		9.1	%		$	49.80		8.7	%
	2025			3,509,688		9.2	%		$	48.72		8.6	%
	2026			2,643,585		6.9	%		$	51.68		6.8	%
	2027			2,777,021		7.3	%		$	54.66		7.6	%
	2028			4,617,753		12.1	%		$	51.68		12.0	%
	2029			2,484,172		6.5	%		$	51.69		6.4	%
	2030			2,655,426		6.9	%		$	56.77		7.6	%
	2031			3,220,036		8.4	%		$	53.59		8.6	%
	2032			1,168,527		3.1	%		$	56.45		3.3	%
Thereafter				10,545,063		27.5	%		$	52.79		27.9	%

(1)Represents amounts in effect as of June 30, 2023.

(2)Excludes month-to-month leases aggregating 82,025 RSF as of June 30, 2023.

The following tables present information by market with respect to our lease expirations in North America as of June 30, 2023 for the remainder of 2023 and for all of 2024:


	2023 Contractual Lease Expirations (in RSF)											Annual Rental Revenue (per RSF)(4)
Market	Leased		Negotiating/ Anticipating		Targeted for Future Development/ Redevelopment(1)			Remaining Expiring Leases(2)		Total(3)

Greater Boston	38,652		21,675		111,294		(5)	48,508		220,129		$	72.90
San Francisco Bay Area	24,056		16,214		—			180,804		221,074		48.17
New York City	—		—		—			500		500		N/A
San Diego	171,422		—		54,664			58,358		284,444		32.14
Seattle	113,073		11,332		—			85,083		209,488		34.10
Maryland	8,138		89,831		—			84,140		182,109		30.41
Research Triangle	3,646		—		—			16,260		19,906		32.01
Texas	—		—		—			—		—		—
Canada	13,321		—		—			2,484		15,805		28.13
Non-cluster/other markets	—		4,354		—			3,111		7,465		58.48
Total	372,308		143,406		165,958			479,248		1,160,920		$	43.23
Percentage of expiring leases	32	%	12	%	14	%		42	%	100	%

	2024 Contractual Lease Expirations (in RSF)											Annual Rental Revenue (per RSF)(4)
Market	Leased		Negotiating/ Anticipating		Targeted for Future Development/ Redevelopment(1)			Remaining Expiring Leases(2)		Total

Greater Boston	84,964		—		412,946			491,848		989,758		$	65.73
San Francisco Bay Area	35,798		22,923		107,250			551,988		717,959		61.92
New York City	—		—		—			362,718		362,718		56.63
San Diego	—		37,413		580,021		(6)	229,409		846,843		28.67
Seattle	28,051		6,230		50,552			206,042		290,875		23.30
Maryland	—		10,055		—			34,864		44,919		21.65
Research Triangle	75,346		6,672		—			103,124		185,142		47.58
Texas	—		—		—			—		—		—
Canada	—		—		—			6,786		6,786		23.53
Non-cluster/other markets	—		—		—			30,475		30,475		65.94
Total	224,159		83,293		1,150,769			2,017,254		3,475,475		$	49.80
Percentage of expiring leases	6	%	2	%	33	%		59	%	100	%

(1)Includes lease expirations primarily related to recently acquired properties, including i) 111,294 RSF and 466,248 RSF expiring in 2023 and 2024, respectively, which is targeted for future redevelopment and expected to commence construction in the near-term, and ii) 54,664 RSF and 684,521 RSF expiring in 2023 and 2024, respectively, which is targeted for future development and not expected to commence vertical construction in the near-term. We expect to demolish these buildings targeted for future development following lease expiration and commence pre-construction activities including entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. Commencement of future development projects is subject to market conditions and leasing. The 2023 and 2024 weighted-average contractual lease expiration date for all spaces targeted for redevelopment and development (weighted by annual rental revenue) is July 1, 2023 and July 18, 2024, respectively. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details on value-creation square feet currently included in rental properties.

(2)The largest remaining contractual lease expirations for 2023 and 2024 are 55,751 RSF and 97,702 RSF, respectively, in our Mission Bay submarket.

(3)Excludes month-to-month leases aggregating 82,025 RSF as of June 30, 2023.

(4)Represents amounts in effect as of June 30, 2023.

(5)Represents 111,294 RSF at 401 Park Drive in our Fenway submarket, which is a near-term redevelopment project.

(6)Includes 495,192 RSF at Campus Point by Alexandria mega campus in our University Towne Center submarket, which is targeted for future development, pending market conditions and leasing.

Top 20 tenants

90% of Top 20 Tenants Annual Rental Revenue Is From Investment-Grade

or Publicly Traded Large Cap Tenants**(1)**

Our properties are leased to a high-quality and diverse group of tenants, with no individual tenant accounting for more than 3.5% of our annual rental revenue in effect as of June 30, 2023. The following table sets forth information regarding leases with our 20 largest tenants in North America based upon annual rental revenue in effect as of June 30, 2023 (dollars in thousands, except average market cap amounts):


		Remaining Lease Term(1) (in Years)			Aggregate RSF		Annual Rental Revenue(1)		Percentage of Aggregate Annual Rental Revenue (1)		Investment-Grade Credit Ratings		Average Market Cap(1) (in billions)

	Tenant					Moody’s	S&P
1	Bristol-Myers Squibb Company		6.5		951,172		$	69,343	3.5	%	A2	A+	$	151.0
2	Moderna, Inc.		13.3		908,436			51,934	2.6		—	—	$	59.5
3	Eli Lilly and Company		5.8		743,267			49,746	2.5		A2	A+	$	339.2
4	Takeda Pharmaceutical Company Limited		6.5		549,760			37,432	1.9		Baa2	BBB+	$	47.6
5	Alphabet Inc.		3.4		654,423			36,809	1.8		Aa2	AA+	$	1,349.0
6	Illumina, Inc.		7.1		890,389			36,204	1.8		Baa3	BBB	$	32.9
7	2seventy bio, Inc.(2)		10.2		312,805			33,617	1.7		—	—	$	0.5
8	Harvard University		6.5		391,625			31,889	1.6		Aaa	AAA	$	—
9	Novartis AG		5.1		447,831			30,976	1.5		A1	AA-	$	209.0
10	Cloud Software Group, Inc.		3.7	(3)	292,013			28,537	1.4		—	—	$	—
11	Uber Technologies, Inc.		59.2	(4)	1,009,188			27,727	1.4		—	—	$	61.8
12	Roche		6.1		417,011			27,026	1.3		Aa2	AA	$	262.0
13	AstraZeneca PLC		5.7		456,266			25,132	1.3		A3	A	$	207.0
14	Sanofi		7.5		267,278			21,444	1.1		A1	AA	$	121.0
15	Pfizer Inc.		1.3	(5)	405,066			21,421	1.1		A1	A+	$	251.6
16	New York University		8.6		218,983			21,056	1.0		Aa2	AA-	$	—
17	Massachusetts Institute of Technology		5.9		246,725			20,504	1.0		Aaa	AAA	$	—
18	Boston Children's Hospital		13.3		269,816			20,066	1.0		Aa2	AA	$	—
19	United States Government		6.8		313,778			19,586	1.0		Aaa	AA+	$	—
20	Merck & Co., Inc.		10.8		300,930			18,913	0.9		A1	A+	$	262.0
	Total/weighted-average		9.4	(4)	10,046,762		$	629,362	31.4	%

Annual rental revenue and RSF include 100% of each property managed by us in North America.

(1)Based on total annual rental revenue in effect as of June 30, 2023. Refer to the definitions of “Annual rental revenue” and “Investment-grade or publicly traded large cap tenants” in the “Non-GAAP measures and definitions” section within this Item 2 for our methodologies of calculating annual rental revenue from unconsolidated real estate joint ventures and average market capitalization, respectively.

(2)As of March 31, 2023, 2seventy bio, Inc. held $339.9 million of cash, cash equivalents, and marketable securities.

(3)Includes one lease at a recently acquired property with future development and redevelopment opportunities. This lease with Cloud Software Group, Inc. (formerly known as TIBCO Software, Inc.) was in place when we acquired the properties.

(4)Includes (i) ground leases for land at 1455 and 1515 Third Street (two buildings aggregating 422,980 RSF) and (ii) leases at 1655 and 1725 Third Street (two buildings aggregating 586,208 RSF) in our Mission Bay submarket owned by our unconsolidated real estate joint venture in which we have an ownership interest of 10%. Annual rental revenue is presented using 100% of the annual rental revenue from our consolidated properties and our share of annual rental revenue from our unconsolidated real estate joint ventures. Refer to footnote 1 for additional details. Excluding the ground leases, the weighted-average remaining lease term for our top 20 tenants was 7.3 years as of June 30, 2023.

(5)Primarily relates to one office building in our New York City submarket aggregating 349,947 RSF, which is under consideration to be marketed for lease in its current condition or may be developed or redeveloped into laboratory space, subject to market conditions and leasing.

Locations of properties

The locations of our properties are diversified among a number of life science, agtech, and technology cluster markets. The following table sets forth the total RSF, number of properties, and annual rental revenue in effect as of June 30, 2023 in each of our markets in North America (dollars in thousands, except per RSF amounts):


	RSF							Number of Properties		Annual Rental Revenue
Market	Operating	Development	Redevelopment		Total	% of Total			Total			% of Total			Per RSF(1)
Greater Boston	10,638,208	1,435,071	1,187,368	(2)	13,260,647	29	%	76		$	715,148		35	%		$	72.69
San Francisco Bay Area	7,813,406	728,734	300,010		8,842,150	19		68		452,282			23			65.25
New York City	1,270,019	—	—		1,270,019	3		5		91,369			5			80.96
San Diego	7,956,010	171,102	—		8,127,112	17		90		320,656			14			43.42
Seattle	2,831,272	311,631	178,129		3,321,032	7		45		111,634			6			41.47
Maryland	3,513,817	537,061	47,395		4,098,273	9		51		117,969			6			35.19
Research Triangle	3,871,551	88,038	—		3,959,589	9		40		113,684			6			31.15
Texas	1,841,499	—	84,331		1,925,830	4		15		52,707			3			30.08
Canada	834,968	—	217,798		1,052,766	2		11		13,345			1			18.31
Non-cluster/other markets	382,961	—	—		382,961	1		11		16,404			1			52.69
Properties held for sale	168,414	—	—		168,414	—		2		421			—			N/A
North America	41,122,125	3,271,637	2,015,031		46,408,793	100	%	414		$	2,005,619		100	%		$	53.09
		5,286,668

(1)Annual rental revenue per RSF excludes expense recoveries received from tenants, including, for example, approximately $22 per RSF in San Diego and $35 per RSF in New York City for the twelve months ended June 30, 2023. As of June 30, 2023, approximately 93% of our leases were triple net leases.

(2)Primarily relates to our 654,953 RSF active redevelopment projects at 40, 50, and 60 Sylvan Road and 840 Winter Street. This mega campus project is expected to capture demand in our Route 128 submarket of Greater Boston.

Summary of occupancy percentages in North America

The following table sets forth the occupancy percentages for our operating properties and our operating and redevelopment properties in each of our North America markets, excluding properties held for sale, as of the following dates:


	Operating Properties						Operating and Redevelopment Properties
Market	6/30/23		3/31/23		6/30/22		6/30/23		3/31/23		6/30/22
Greater Boston	92.5	%	92.8	%	95.0	%	83.2	%	81.8	%	84.7	%
San Francisco Bay Area	95.5		95.9		95.8		91.9		92.3		92.6
New York City	88.9		89.2		97.3		88.9		89.2		92.2
San Diego	92.8		94.2		96.3		92.8		94.2		96.3
Seattle	95.1		96.0		97.2		89.5		90.4		90.4
Maryland	96.2		95.7		97.6		94.9		94.2		94.2
Research Triangle	94.3		92.7		93.5		94.3		92.7		84.5
Texas	95.1		89.8		78.4		91.0		83.7		69.9
Subtotal	93.8		93.9		95.1		89.8		89.1		89.3
Canada	87.3		86.8		76.8		69.2		68.8		76.8
Non-cluster/other markets	81.3		79.7		76.7		81.3		79.7		76.7
North America	93.6	%	93.6	%	94.6	%	89.2	%	88.5	%	89.0	%

Investments in real estate

A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new Class A/A+ properties, and property enhancements identified during the underwriting of certain acquired properties, located in collaborative life science, agtech, and advanced technology campuses in AAA innovation clusters. These projects are focused on providing high-quality, generic, and reusable spaces that meet the real estate requirements of, and are reusable by, a wide range of tenants. Upon completion, each value-creation project is expected to generate increases in rental income, net operating income, and cash flows. Our development and redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. Our pre-construction activities are undertaken in order to prepare the property for its intended use and include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements.

Our investments in real estate consisted of the following as of June 30, 2023 (dollars in thousands):


			Development and Redevelopment
			Active and Near-Term Construction				Future Opportunities Subject to Market Conditions and Leasing
	Operating		Under Construction 70% Leased/Negotiating		Committed Near Term 71% Leased(1)		Near Term		Intermediate Term		Future		Subtotal		Total
Square footage
Operating	41,122,125		—		—		—		—		—		—		41,122,125
New Class A/A+ development and redevelopment properties	—		5,286,668		1,427,190		3,064,003		6,038,906		22,254,262		38,071,029		38,071,029
Value-creation square feet currently included in rental properties(2)	—		—		—		(577,542)		(539,276)		(3,222,186)		(4,339,004)		(4,339,004)
Total square footage	41,122,125		5,286,668		1,427,190		2,486,461		5,499,630		19,032,076		33,732,025		74,854,150

Investments in real estate
Gross book value as of June 30, 2023(3)	$	26,600,472	$	4,184,334	$	565,424	$	684,990	$	1,351,244	$	2,434,255	$	9,220,247	$	35,820,719

(1)Represents near-term projects expected to commence construction during the next three quarters after June 30, 2023.

(2)Refer to “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details on value-creation square feet currently included in rental properties.

(3)Balances exclude accumulated depreciation and our share of the cost basis associated with our properties held by our unconsolidated real estate joint ventures, which is classified as investments in unconsolidated real estate joint ventures in our consolidated balance sheets.

Acquisitions

Our real estate asset acquisitions for the six months ended June 30, 2023 consisted of the following (dollars in thousands):


Property	Submarket/Market	Date of Purchase	Number of Properties	Operating Occupancy		Square Footage				Purchase Price
		Acquisitions With Development and Redevelopment Opportunities(1)
		Future Development	Active Development/Redevelopment	Operating With Future Development/ Redevelopment				Total(2)

Six months ended June 30, 2023:
Canada	Canada	1/30/23	1	100	%	—	—		247,743		247,743	$	100,837
Other	Various		2	100		1,089,349	110,717		10,000		1,210,066		125,103
			3	100	%	1,089,349	110,717		257,743		1,457,809	$	225,940

(1)We expect to provide total estimated costs and related yields for development and redevelopment projects in the future, subsequent to the commencement of construction.

(2)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes RSF of buildings currently in operations with future development or redevelopment opportunities. Refer to “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

Dispositions and sales of partial interests

Our completed dispositions of and sales of partial interests in real estate assets during the six months ended June 30, 2023 consisted of the following (dollars in thousands, except per RSF amounts):


Property	Submarket/Market	Date of Sale	Interest Sold			RSF	Capitalization Rate			Capitalization Rate (Cash Basis)			Sales Price			Sales Price per RSF
Six months ended June 30, 2023:
Value harvesting dispositions and recycling of assets not integral to our mega campus strategy
225, 266, and 275 Second Avenue and 780 and 790 Memorial Drive(1)	Route 128 and Cambridge/Inner Suburbs/Greater Boston	6/13/23	100	%		428,663	5.0	%	(1)	5.2	%	(1)	$	365,226		$	852
11119 North Torrey Pines Road(2)	Torrey Pines/San Diego	5/4/23	100	%		72,506	4.4	%	(2)	4.6	%	(2)	86,000			$	1,186
275 Grove Street(3)	Route 128/Greater Boston	6/27/23	100	%		509,702	N/A			N/A			109,349			N/A
Other													42,092
													602,667		(4)
Strategic partial interest sales
15 Necco Street(5)	Seaport Innovation District/Greater Boston	4/11/23	18	%	(5)	345,995	6.6	%		5.4	%		66,108			$	1,626
9625 Towne Centre Drive(6)	University Town Center/ San Diego	6/21/23	20.1	%		163,648	4.2	%		4.5	%		32,261			$	981
													98,369
													701,036
Pending:
421 Park Drive(7)	Fenway/Greater Boston		(7)			(7)							155,000
Executed and pending transactions subject to signed letters of intent or purchase and sale agreements													20,000
Total pending and under executed letters of intent or purchase and sales agreements													175,000
													876,036
Additional targeted non-core dispositions in process													873,964
2023 dispositions and sales of partial interests (midpoint)													$	1,750,000

2023 guidance range						$1,650,000 – $1,850,000

(1)We calculated capitalization rates based upon net operating income and net operating income (cash basis) for the three months ended June 30, 2023 annualized that includes vacancy available for redevelopment. Upon completion of the sale, we recognized a gain on sale of real estate aggregating $187.2 million.

(2)We calculated capitalization rates based upon net operating income and net operating income (cash basis) for the three months ended March 31, 2023 annualized. Upon completion of the sale, we recognized a gain on sale of real estate aggregating $27.6 million.

(3)During the three months ended June 30, 2023, we recognized a real estate impairment charge of $145.4 million to reduce our investment to its current fair value less costs to sell.

(4)Dispositions completed during the three months ended June 30, 2023 had annual net operating income of $32.4 million with a weighted-average disposition date of June 13, 2023 (weighted by net operating income for the three months ended June 30, 2023 annualized).

(5)Represents a development project under construction aggregating 345,995 RSF, 97% of which is leased to Eli Lilly and Company for the Lilly Institute for Genetic Medicine. In April 2023, an investor acquired a 20% interest in this joint venture, which consisted of an 18% interest sold by us and a 2% interest sold by our existing partner. Upon completion of the sale, our ownership interest in the consolidated real estate joint venture was 72% and our existing and new partners’ noncontrolling interests were 8% and 20%, respectively. We retained control over this real estate joint venture and therefore continue to consolidate it. The sales price of the 18% interest sold by us was $66.1 million, or $1,626 per RSF, representing capitalization rates of 6.6% and 5.4% (cash basis). We expect our new joint venture partner to contribute capital approximating $130 million to fund construction of the project over time and to accrete its ownership interest in the joint venture to 37% from 20%.

(6)An investor acquired a 70.0% interest in this consolidated real estate joint venture, which consisted of a 20.1% interest sold by us and a 49.9% interest held by our previous joint venture partner. Our portion of the sales price was $32.3 million, or $981 per RSF, representing capitalization rates of 4.2% and 4.5% (cash basis) based upon net operating income and net operating income (cash basis) for the three months ended June 30, 2023 annualized. We retained control over this real estate joint venture and therefore continue to consolidate this property. This transaction resulted in consideration in excess of book value of $15.6 million.

(7)Represents the disposition of 268,023 RSF of a 660,034 RSF near-term development at 421 Park Drive. The proceeds from this transaction will help fund our remaining 392,011 RSF of the project. The project is expected to commence vertical construction later this year and be completed in 2026. The buyer will fund the project costs related to its 268,023 RSF, and these costs are not included in our projected construction spending. We will develop and operate the completed project and will earn development fees over the next three years.

New Class A/A+ development and redevelopment properties

Refer to “Net operating income” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details and its reconciliation from the most directly comparable financial measures presented in accordance with GAAP.

(1)Our share of annual incremental net operating income primarily commencing from 3Q23 through 4Q24 and from 3Q23 through 2Q26 is $237 million and $516 million, respectively.

(2)As of June 30, 2023. Represents projects under construction aggregating 5.3 million RSF and four near-term projects aggregating 1.4 million RSF expected to commence construction during the next three quarters after June 30, 2023.

New Class A/A+ development and redevelopment properties: recent deliveries


201 Brookline Avenue	140 First Street	Alexandria Center® for Advanced Technologies – Monte Villa Parkway(1)
Greater Boston/Fenway	Greater Boston/Cambridge	Seattle/Bothell
451,967 RSF	325,346 RSF	35,847 RSF
100% Occupancy	100% Occupancy	100% Occupancy


9601 and 9603 Medical Center Drive(2)	20400 Century Boulevard	2400 Ellis Road, 40 Moore Drive, and 14 TW Alexander Drive(3)	8800 Technology Forest Place
Maryland/Rockville	Maryland/Gaithersburg	Research Triangle/Research Triangle	Texas/Greater Houston
48,516 RSF	81,006 RSF	603,316 RSF	46,434 RSF
100% Occupancy	100% Occupancy	100% Occupancy	100% Occupancy

(1)Image represents 3755 Monte Villa Parkway.

(2)Image represents 9601 Medical Center Drive.

(3)Image represents 2400 Ellis Road on our Alexandria Center® for Life Science – Durham mega campus.

New Class A/A+ development and redevelopment properties: recent deliveries (continued)

The following table presents value-creation development and redevelopment of new Class A/A+ properties placed into service during the six months ended June 30, 2023 (dollars in thousands):

Deliveries in 1H23 commenced $81 million in annual incremental net operating income


Property/Market/Submarket	2Q23 Delivery Date(1)		Our Ownership Interest		RSF Placed in Service						Occupancy Percentage(2)			Total Project			Unlevered Yields
		Prior to 1/1/23		1Q23		2Q23				Total			Initial Stabilized			Initial Stabilized (Cash Basis)
								RSF	Investment
Development projects
201 Brookline Avenue/Greater Boston/Fenway	5/1/23		98.8%		340,073		107,174	4,720				451,967			100%		510,116	$	775,000	7.2	%	6.5	%



Redevelopment projects
140 First Street/Greater Boston/Cambridge	5/14/23		100%		—		—	325,346				325,346			100%		408,259	1,242,000		5.5		4.6
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Seattle/Bothell	N/A		100%		—		35,847	—				35,847			100%		460,623	229,000		6.3		6.2
9601 and 9603 Medical Center Drive/Maryland/Rockville	N/A		100%		34,589		13,927	—				48,516			100%		95,911	67,000		7.4		6.5
20400 Century Boulevard/Maryland/Gaithersburg	5/31/23		100%		50,738		19,692	10,576				81,006			100%		81,006	35,000		9.5		9.3
2400 Ellis Road, 40 Moore Drive, and 14 TW Alexander Drive/Research Triangle/Research Triangle	N/A		100%		326,445		276,871	—				603,316			100%		603,316	241,000		8.1		6.8
8800 Technology Forest Place/Texas/Greater Houston	6/15/23		100%		—		—	46,434				46,434			100%		130,765	112,000		6.3		6.0
Weighted average/total	5/16/23				751,845		453,511	387,076				1,592,432					2,289,996	$	2,701,000	6.4	%	5.6	%

(1)Represents the average delivery date for deliveries that occurred during the three months ended June 30, 2023, weighted by annual rental revenue.

(2)Relates to total operating RSF placed in service as of the most recent delivery.

New Class A/A+ development and redevelopment properties: current projects


325 Binney Street	140 First Street	99 Coolidge Avenue	500 North Beacon Street and 4 Kingsbury Avenue(1)	201 Brookline Avenue
Greater Boston/Cambridge	Greater Boston/Cambridge	Greater Boston/ Cambridge/Inner Suburbs	Greater Boston/ Cambridge/Inner Suburbs	Greater Boston/Fenway
462,100 RSF	78,546 RSF	320,809 RSF	248,018 RSF	58,149 RSF
100% Leased	100% Leased	36% Leased/Negotiating	85% Leased/Negotiating	98% Leased/Negotiating


15 Necco Street	40, 50, and 60 Sylvan Road(2)	1450 Owens Street(3)	651 Gateway Boulevard	230 Harriet Tubman Way
Greater Boston/ Seaport Innovation District	Greater Boston/Route 128	San Francisco Bay Area/ Mission Bay	San Francisco Bay Area/ South San Francisco	San Francisco Bay Area/ South San Francisco
345,995 RSF	515,273 RSF	212,796 RSF	300,010 RSF	285,346 RSF
97% Leased/Negotiating	—% Leased/Negotiating	—% Leased/Negotiating	22% Leased/Negotiating	100% Leased

(1)Image represents 500 North Beacon Street on our Arsenal on the Charles mega campus.

(2)Image represents 50 Sylvan Road. This mega campus project is expected to capture demand in our Route 128 submarket. We are currently marketing the space for lease and are in preliminary discussions with multiple life science companies for a portion of the project.

(3)Image represents a single- or multi-tenant project expanding our existing mega campus, which will be 100% funded by our joint venture partner. We are currently marketing the space for lease and have initial interest from publicly traded biotechnology and institutional tenants.

New Class A/A+ development and redevelopment properties: current projects (continued)


751 Gateway Boulevard	4155 Campus Point Court	1150 Eastlake Avenue East	Alexandria Center® for Advanced Technologies – Monte Villa Parkway(1)
San Francisco Bay Area/ South San Francisco	San Diego/ University Town Center	Seattle/Lake Union	Seattle/Bothell
230,592 RSF	171,102 RSF	311,631 RSF	178,129 RSF
100% Leased	100% Leased	99% Leased/Negotiating	82% Leased/Negotiating


9810 and 9820 Darnestown Road	9601 and 9603 Medical Center Drive(2)	9808 Medical Center Drive	6040 George Watts Hill Drive, Phase II	8800 Technology Forest Place
Maryland/Rockville	Maryland/Rockville	Maryland/Rockville	Research Triangle/Research Triangle	Texas/Greater Houston
442,000 RSF	47,395 RSF	95,061 RSF	88,038 RSF	84,331 RSF
100% Leased	100% Leased	55% Leased/Negotiating	100% Leased	36% Leased/Negotiating

(1)Image represents 3755 Monte Villa Parkway.

(2)Image represents 9601 Medical Center Drive.

New Class A/A+ development and redevelopment properties: current projects (continued)

The following tables set forth a summary of our new Class A/A+ development and redevelopment properties under construction and pre-leased/negotiating near-term projects as of June 30, 2023 (dollars in thousands):


Property/Market/Submarket				Square Footage						Percentage							Occupancy(1)
	Dev/Redev		In Service		CIP		Total		Leased			Leased/Negotiating				Initial			Stabilized
Under construction
2023 stabilization
325 Binney Street/Greater Boston/Cambridge(2)		Dev		—		462,100		462,100		100	%		100	%				2023		2023
140 First Street/Greater Boston/Cambridge		Redev		329,713		78,546		408,259		100			100					2Q23		2023
201 Brookline Avenue/Greater Boston/Fenway		Dev		451,967		58,149		510,116		98			98					3Q22		2023
15 Necco Street/Greater Boston/Seaport Innovation District		Dev		—		345,995		345,995		97			97					2023		2023
751 Gateway Boulevard/San Francisco Bay Area/South San Francisco		Dev		—		230,592		230,592		100			100					2023		2023
				781,680		1,175,382		1,957,062		99			99
2024 stabilization
840 Winter Street/Greater Boston/Route 128		Redev		28,534		139,680		168,214		100			100					2024		2024
230 Harriet Tubman Way/San Francisco Bay Area/South San Francisco		Dev		—		285,346		285,346		100			100					2024		2024
4155 Campus Point Court/San Diego/University Town Center		Dev		—		171,102		171,102		100			100					2024		2024
1150 Eastlake Avenue East/Seattle/Lake Union		Dev		—		311,631		311,631		99			99					2023		2024
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Seattle/Bothell		Redev		282,494		178,129		460,623		82			82					1Q23		2024
9820 Darnestown Road/Maryland/Rockville		Dev		—		250,000		250,000		100			100					2024		2024
9810 Darnestown Road/Maryland/Rockville		Dev		—		192,000		192,000		100			100					2024		2024
9601 and 9603 Medical Center Drive/Maryland/Rockville		Redev		48,516		47,395		95,911		100			100					4Q21		2024
9808 Medical Center Drive/Maryland/Rockville		Dev		—		95,061		95,061		37			55					2023		2024
6040 George Watts Hill Drive, Phase II/Research Triangle/Research Triangle		Dev		—		88,038		88,038		100			100					2024		2024
8800 Technology Forest Place/Texas/Greater Houston		Redev		46,434		84,331		130,765		36			36					2Q23		2024
				405,978		1,842,713		2,248,691		90			91
				1,187,658		3,018,095		4,205,753		94			94
2025 and beyond stabilization
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs		Dev		—		320,809		320,809		36			36					2024		2025
500 North Beacon Street and 4 Kingsbury Avenue/Greater Boston/ Cambridge/Inner Suburbs		Dev		—		248,018		248,018		85			85					2024		2025
40, 50, and 60 Sylvan Road/Greater Boston/Route 128		Redev		—		515,273		515,273		—			—		(3)			2024		2026
Other/Greater Boston		Redev		—		453,869		453,869		—			—					2024		2025
1450 Owens Street/San Francisco Bay Area/Mission Bay		Dev		—		212,796		212,796		—			—		(4)			2024		2025
651 Gateway Boulevard/San Francisco Bay Area/South San Francisco		Redev		—		300,010		300,010		15			22					2023		2025
Canada		Redev		32,992		217,798		250,790		73			73					2023		2025
				32,992		2,268,573		2,301,565		24			25		(5)

				1,220,650		5,286,668		6,507,318		69	%		70	%
(1)Initial occupancy dates are subject to leasing and/or market conditions. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy. Multi-tenant projects may increase in occupancy over a period of time. (2)We expect to deliver this development project in late 2023. (3)This mega campus project is expected to capture demand in our Route 128 submarket. We are currently marketing the space for lease and are in preliminary discussions with multiple life science companies for a portion of the project. (4)Represents a single- or multi-tenant project expanding our existing mega campus, which will be 100% funded by our joint venture partner. We are currently marketing the space for lease and have initial interest from publicly traded biotechnology and institutional tenants. (5)These projects are focused on demand from our existing tenants in our adjacent properties/campuses and will also address demand from other non-Alexandria properties/campuses.

New Class A/A+ development and redevelopment properties: current projects (continued)


Property/Market/Submarket				Square Footage						Percentage
	Dev/Redev		In Service		CIP		Total		Leased				Leased/Negotiating
Near-term projects expected to commence construction in the next three quarters
2025 and beyond stabilization
401 and 421 Park Drive/Greater Boston/Fenway(1)		Redev/Dev		111,294		392,011		503,305		10	%			10	%
11255 and 11355 North Torrey Pines Road/San Diego/Torrey Pines		Dev		—		309,094		309,094		100				100
10931 and 10933 North Torrey Pines Road/San Diego/Torrey Pines		Dev		—		299,158		299,158		100				100
4135 Campus Point Court/San Diego/University Town Center		Dev		—		426,927		426,927		100				100
				111,294		1,427,190		1,538,484		71				71
Total				1,331,944		6,713,858		8,045,802		70	%	(2)		70	%

(1)Excludes the estimated square footage associated with the 268,023 RSF expected to be sold at 421 Park Drive. Refer to “Disposition and sales of partial interests” within this Item 2 for additional details.

(2)Decline from 72% as of March 31, 2023 results from the inclusion of our near-term projects at 401 and 421 Park Drive in Greater Boston. Excluding this addition, our total current and near-term projects expected to commence construction in the next three quarters are 74% leased as of the date of this report.

New Class A/A+ development and redevelopment properties: current projects (continued)


	Our Ownership Interest			At 100%										Unlevered Yields
Property/Market/Submarket			In Service	CIP		Cost to Complete		Total at Completion			Initial Stabilized						Initial Stabilized (Cash Basis)

Under construction
2023 stabilization
325 Binney Street/Greater Boston/Cambridge	100	%		$	—	$	639,273	$	251,727		$	891,000			8.5	%		7.2	%
140 First Street/Greater Boston/Cambridge	100	%		964,842		238,505		38,653			1,242,000				5.5	%		4.6	%
201 Brookline Avenue/Greater Boston/Fenway	98.8	%		658,745		72,538		43,717			775,000				7.2	%		6.5	%
15 Necco Street/Greater Boston/Seaport Innovation District	67.3	%		—		427,610		139,390			567,000				6.7	%		5.5	%
751 Gateway Boulevard/San Francisco Bay Area/South San Francisco	51.0	%		—		202,846		43,154			246,000				6.9	%		7.5	%
				1,623,587		1,580,772
2024 stabilization
840 Winter Street/Greater Boston/Route 128	100	%		13,648		119,940		74,412			208,000				7.5	%		6.5	%
230 Harriet Tubman Way/San Francisco Bay Area/South San Francisco	46.2	%		—		155,873		257,127			413,000				7.4	%		6.2	%
4155 Campus Point Court/San Diego/University Town Center	55.0	%		—		62,608		110,392			173,000				7.4	%		6.5	%
1150 Eastlake Avenue East/Seattle/Lake Union	100	%		—		326,394		78,606			405,000				6.4	%		6.2	%
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Seattle/Bothell	100	%		74,698		92,501		61,801			229,000				6.3	%		6.2	%
9820 Darnestown Road/Maryland/Rockville	100	%		—		84,001		92,999			177,000				6.3	%		5.6	%
9810 Darnestown Road/Maryland/Rockville	100	%		—		100,598		32,402			133,000				6.9	%		6.2	%
9601 and 9603 Medical Center Drive/Maryland/Rockville	100	%		31,290		19,214		16,496			67,000				7.4	%		6.5	%
9808 Medical Center Drive/Maryland/Rockville	100	%		—		77,404		TBD
6040 George Watts Hill Drive, Phase II/Research Triangle/Research Triangle	100	%		—		51,125		12,875			64,000				8.0	%		7.0	%
8800 Technology Forest Place/Texas/Greater Houston	100	%		33,897		56,096		22,007			112,000				6.3	%		6.0	%
				153,533		1,145,754
2025 and beyond stabilization(1)
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs	75.0	%		—		233,411		TBD
500 North Beacon Street and 4 Kingsbury Avenue/Greater Boston/ Cambridge/Inner Suburbs	100	%		—		247,720		179,280			427,000				6.2	%		5.5	%
40, 50, and 60 Sylvan Road/Greater Boston/Route 128	100	%		—		369,777		TBD
Other/Greater Boston	100	%		—		135,637
1450 Owens Street/San Francisco Bay Area/Mission Bay	46.4	%		—		179,884
651 Gateway Boulevard/San Francisco Bay Area/South San Francisco	50.0	%		—		245,559
Canada	100	%		4,517		45,820		53,663			104,000				7.0	%		7.0	%
				4,517		1,457,808

				$	1,781,637	$	4,184,334	$	2,700,000	(2)	$	8,670,000	(2)
(1)We expect to provide total estimated costs and related yields for each project with estimated stabilization in 2025 and beyond over the next several quarters. (2)Amounts are rounded to the nearest $10 million and include preliminary estimated amounts for projects listed as TBD.

New Class A/A+ development and redevelopment properties: current projects (continued)


	Our Ownership Interest			At 100%
Property/Market/Submarket			In Service	CIP		Cost to Complete			Total at Completion

Near-term projects expected to commence construction in the next three quarters
2025 and beyond stabilization									TBD
401 and 421 Park Drive/Greater Boston/Fenway(1)	100	%		$	115,378	$	213,309
11255 and 11355 North Torrey Pines Road/San Diego/Torrey Pines	100	%		—		139,472
10931 and 10933 North Torrey Pines Road/San Diego/Torrey Pines	100	%		—		120,308
4135 Campus Point Court/San Diego/University Town Center	55.0	%		—		92,335

				115,378		565,424			1,680,000		(2)	2,360,000		(2)
Total				$	1,897,015	$	4,749,758		$	4,380,000	(2)	$	11,030,000	(2)
Our share of investment(3)						$	4,080,000	(2)	$	3,750,000	(2)	$	9,720,000	(2)

(1)Excludes the estimated book value associated with the 268,023 RSF expected to be sold at 421 Park Drive. Refer to “Disposition and sales of partial interests” within this Item 2 for additional details.

(2)Amounts are rounded to the nearest $10 million and include preliminary estimated amounts for projects listed as TBD.

(3)Represents our share of investment based on our ownership percentages at the completion of development or redevelopment projects.

New Class A/A+ development and redevelopment properties: summary of pipeline

The following table summarizes the key information for all our development and redevelopment projects in North America as of June 30, 2023 (dollars in thousands):


Market Property/Submarket	Our Ownership Interest			Book Value		Square Footage
			Development and Redevelopment						Total(1)
			Active and Near-Term Construction			Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term		Near Term	Intermediate Term	Future

Greater Boston
Mega Campus: Alexandria Center® at One Kendall Square/Cambridge	100	%		$	639,273	462,100	—	—	—	—	462,100
325 Binney Street
99 Coolidge Avenue/Cambridge/Inner Suburbs	75.0	%		233,411		320,809	—	—	—	—	320,809
Mega Campus: The Arsenal on the Charles/Cambridge/Inner Suburbs	100	%		258,790		248,018	—	308,446	—	34,157	590,621
311 Arsenal Street, 500 North Beacon Street, and 4 Kingsbury Avenue
Mega Campus: Alexandria Center® at Kendall Square/Cambridge	100	%		340,833		78,546	—	—	174,500	41,955	295,001
140 First Street and 100 Edwin H. Land Boulevard
Mega Campus: Alexandria Center® for Life Science – Fenway/Fenway	(2)			285,847		58,149	392,011	111,294	—	—	561,454
201 Brookline Avenue and 401 and 421 Park Drive
15 Necco Street/Seaport Innovation District	67.3	%		427,610		345,995	—	—	—	—	345,995
Mega Campus: 40, 50, and 60 Sylvan Road, 35 Gatehouse Drive, and 840 Winter Street/Route 128	100	%		548,440		654,953	—	—	—	515,000	1,169,953
Mega Campus: 480 Arsenal Way and 446, 458, 500, and 550 Arsenal Street/Cambridge/Inner Suburbs	100	%		80,501		—	—	—	—	902,000	902,000
446, 458, 500, and 550 Arsenal Street
Mega Campus: Alexandria Technology Square®/Cambridge	100	%		7,881		—	—	—	—	100,000	100,000
Mega Campus: 380 and 420 E Street/Seaport Innovation District	100	%		128,273		—	—	—	—	1,000,000	1,000,000
99 A Street/Seaport Innovation District	100	%		51,130		—	—	—	—	235,000	235,000
10 Necco Street/Seaport Innovation District	100	%		100,736		—	—	—	—	175,000	175,000
Mega Campus: One Moderna Way/Route 128	100	%		25,470		—	—	—	—	1,100,000	1,100,000
215 Presidential Way/Route 128	100	%		6,808		—	—	—	—	112,000	112,000
Other value-creation projects	(3)			282,673		453,869	—	190,992	—	1,132,549	1,777,410
				$	3,417,676	2,622,439	392,011	610,732	174,500	5,347,661	9,147,343
Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes RSF of buildings currently in operation at properties that also have inherent future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (2)We have a 98.8% interest in 201 Brookline Avenue aggregating 58,149 RSF, which is currently under construction, and a 100% interest in the near-term development projects at 401 and 421 Park Drive aggregating 503,305 RSF. Refer to “Dispositions and sales of partial interests” within this item 2 for additional details on our sale of 268,023 RSF at 421 Park Drive. (3)Includes a property in which we own a partial interest through a real estate joint venture. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional details.

New Class A/A+ development and redevelopment properties: summary of pipeline (continued)


Market Property/Submarket	Our Ownership Interest			Book Value		Square Footage
			Development and Redevelopment						Total(1)
			Active and Near-Term Construction			Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term		Near Term	Intermediate Term	Future
San Francisco Bay Area
Mega Campus: Alexandria Center® for Science and Technology – Mission Bay/Mission Bay	46.4	%		$	179,884	212,796	—	—	—		—	212,796
1450 Owens Street
Mega Campus: Alexandria Technology Center® – Gateway/South San Francisco	(2)			473,752		530,602	—	—	—		291,000	821,602
651 and 751 Gateway Boulevard
Alexandria Center® for Life Science – Millbrae/South San Francisco	46.2	%		311,714		285,346	—	198,188	150,213		—	633,747
230 Harriet Tubman Way, 201 and 231 Adrian Road, and 6 and 30 Rollins Road
Mega Campus: 211(3), 213(3), 249, 259, 269, and 279 East Grand Avenue/South San Francisco	100	%		6,655		—	—	107,250	—		90,000	197,250
211 and 269 East Grand Avenue
Mega Campus: Alexandria Center® for Life Science – San Carlos/Greater Stanford	100	%		410,628		—	—	105,000	700,000		692,830	1,497,830
960 Industrial Road, 987 and 1075 Commercial Street, and 888 Bransten Road
901 California Avenue/Greater Stanford	100	%		14,187		—	—	56,924	—		—	56,924
3825 and 3875 Fabian Way/Greater Stanford	100	%		141,816		—	—	—	250,000		228,000	478,000
Mega Campus: 88 Bluxome Street/SoMa	100	%		367,628		—	—	—	1,070,925		—	1,070,925
Mega Campus: 1122, 1150, and 1178 El Camino Real/South San Francisco	100	%		366,010		—	—	—	—		1,930,000	1,930,000
Other value-creation projects	100	%		—		—	—	—	—		25,000	25,000
				2,272,274		1,028,744	—	467,362	2,171,138		3,256,830	6,924,074
New York City
Mega Campus: Alexandria Center® for Life Science – New York City/New York City	100	%		142,487		—	—	—	550,000	(4)	—	550,000
219 East 42nd Street/New York City	100	%		—		—	—	—	579,947		—	579,947
				$	142,487	—	—	—	1,129,947		—	1,129,947
Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes RSF of buildings currently in operation at properties that also have inherent future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (2)We have a 50.0% ownership interest in 651 Gateway Boulevard aggregating 300,010 RSF and a 51.0% ownership interest in 751 Gateway Boulevard aggregating 230,592 RSF. (3)We own a partial interest in this property through a real estate joint venture. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional details. (4)Pursuant to an option agreement, we are currently negotiating a long-term ground lease with the City of New York for the future site of a new building of approximately 550,000 SF.

New Class A/A+ development and redevelopment properties: summary of pipeline (continued)


Market Property/Submarket	Our Ownership Interest			Book Value		Square Footage
			Development and Redevelopment						Total(1)
			Active and Near-Term Construction			Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term		Near Term	Intermediate Term	Future

San Diego
Mega Campus: Campus Point by Alexandria/University Town Center	55.0	%		$	328,550	171,102	426,927	—	—	1,074,445	1,672,474
10010(2), 10140(2), and 10260 Campus Point Drive and 4110, 4135, 4155, 4161, and 4275(2) Campus Point Court
Mega Campus: One Alexandria Square and One Alexandria North/Torrey Pines	100	%		313,323		—	608,252	—	125,280	—	733,532
10931, 10933, 11255, and 11355 North Torrey Pines Road and 10975 and 10995 Torreyana Road
Mega Campus: SD Tech by Alexandria/Sorrento Mesa	50.0	%		177,310		—	—	254,771	160,000	333,845	748,616
9805 Scranton Road and 10065 and 10075 Barnes Canyon Road
Mega Campus: Sequence District by Alexandria/Sorrento Mesa	100	%		44,362		—	—	200,000	509,000	1,089,915	1,798,915
6260, 6290, 6310, 6340, 6350, and 6450 Sequence Drive
Scripps Science Park by Alexandria/Sorrento Mesa	100	%		90,165		—	—	105,000	175,041	318,308	598,349
10048, 10219, 10256, and 10260 Meanley Drive, and 10277 Scripps Ranch Boulevard
Mega Campus: University District/University Town Center	100	%		153,026		—	—	—	937,000	100,000	1,037,000
9363, 9373, 9393, and 9625(3) Towne Centre Drive, 8410-8750 Genesee Avenue, and 4282 Esplanade Court
Pacific Technology Park/Sorrento Mesa	50.0	%		22,846		—	—	—	149,000	—	149,000
9444 Waples Street
Mega Campus: 5200 Illumina Way/University Town Center	51.0	%		17,264		—	—	—	—	451,832	451,832
4025, 4031, 4045, and 4075 Sorrento Valley Boulevard/Sorrento Valley	100	%		37,440		—	—	—	—	247,000	247,000
Other value-creation projects	100	%		70,650		—	—	—	—	475,000	475,000
				$	1,254,936	171,102	1,035,179	559,771	2,055,321	4,090,345	7,911,718
Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes RSF of buildings currently in operation at properties that also have inherent future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property and commence future construction. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (2)We have a 100% interest in this property. (3)We own a partial interest in this property through a real estate joint venture. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional details.

New Class A/A+ development and redevelopment properties: summary of pipeline (continued)


Market Property/Submarket	Our Ownership Interest			Book Value		Square Footage
			Development and Redevelopment						Total(1)
			Active and Near-Term Construction			Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term		Near Term	Intermediate Term	Future
Seattle
Mega Campus: The Eastlake Life Science Campus by Alexandria/Lake Union	100	%		$	326,394	311,631	—	—	—	—	311,631
1150 Eastlake Avenue East
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell	100	%		92,501		178,129	—	50,552	—	—	228,681
3301, 3555, and 3755 Monte Villa Parkway
Mega Campus: Alexandria Center® for Life Science – South Lake Union/Lake Union	(2)			411,958		—	—	1,095,586	—	188,400	1,283,986
601 and 701 Dexter Avenue North and 800 Mercer Street
830 and 1010 4th Avenue South/SoDo	100	%		56,062		—	—	—	—	597,313	597,313
Mega Campus: Alexandria Center® for Advanced Technologies – Canyon Park/Bothell	100	%		15,159		—	—	—	—	230,000	230,000
21660 20th Avenue Southeast
Other value-creation projects	100	%		92,906		—	—	—	—	691,000	691,000
				994,980		489,760	—	1,146,138	—	1,706,713	3,342,611
Maryland
Mega Campus: Alexandria Center® for Life Science – Shady Grove/Rockville	100	%		300,659		584,456	—	—	258,000	38,000	880,456
9603 and 9808 Medical Center Drive and 9810, 9820, and 9830 Darnestown Road
				$	300,659	584,456	—	—	258,000	38,000	880,456
Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes RSF of buildings currently in operation at properties that also have inherent future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (2)We have a 100% interest in 601 and 701 Dexter Avenue North aggregating 414,986 SF and a 60% interest in the near-term development project at 800 Mercer Street aggregating 869,000 SF.

New Class A/A+ development and redevelopment properties: summary of pipeline (continued)


Market Property/Submarket	Our Ownership Interest			Book Value			Square Footage
			Development and Redevelopment							Total(1)
			Active and Near-Term Construction				Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term			Near Term	Intermediate Term	Future
Research Triangle
6040 George Watts Hill Drive, Phase II/Research Triangle	100	%		$	51,125		88,038	—	—	—	—	88,038
Mega Campus: Alexandria Center® for Advanced Technologies/Research Triangle	100	%		94,015			—	—	180,000	—	990,000	1,170,000
4 and 12 Davis Drive
Mega Campus: Alexandria Center® for NextGen Medicines/Research Triangle	100	%		102,395			—	—	100,000	100,000	855,000	1,055,000
3029 East Cornwallis Road
Mega Campus: Alexandria Center® for Life Science – Durham/Research Triangle	100	%		171,567			—	—	—	150,000	2,060,000	2,210,000
41 Moore Drive
120 TW Alexander Drive, 2752 East NC Highway 54, and 10 South Triangle Drive/Research Triangle	100	%		52,083			—	—	—	—	750,000	750,000
Other value-creation projects	100	%		4,185			—	—	—	—	76,262	76,262
				475,370			88,038	—	280,000	250,000	4,731,262	5,349,300
Texas
8800 Technology Forest Place/Greater Houston	100	%		73,631			84,331	—	—	—	116,287	200,618
1020 Red River Street/Austin	100	%		9,327			—	—	—	—	177,072	177,072
Other value-creation projects	100	%		131,366			—	—	—	—	1,694,000	1,694,000
				214,324			84,331	—	—	—	1,987,359	2,071,690

Canada	100	%		45,820			217,798	—	—	—	371,743	589,541
Other value-creation projects	100	%		101,721			—	—	—	—	724,349	724,349
Total pipeline as of June 30, 2023				$	9,220,247	(2)	5,286,668	1,427,190	3,064,003	6,038,906	22,254,262	38,071,029

Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(1)Total square footage includes 4,339,004 RSF of buildings currently in operation that will be redeveloped or replaced with new development RSF upon commencement of future construction. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(2)Total book value includes $4.2 billion of projects currently under construction that are 70% leased/negotiating. We also expect to commence construction on four near-term projects aggregating $565.4 million, which are 71% leased, in the next three quarters after June 30, 2023.

Results of operations

We present a tabular comparison of items, whether gain or loss, that may facilitate a high-level understanding of our results and provide context for the disclosures included in our annual report on Form 10-K for the year ended December 31, 2022 and our subsequent quarterly reports on Form 10-Q. We believe that such tabular presentation promotes a better understanding for investors of the corporate-level decisions made and activities performed that significantly affect comparison of our operating results from period to period. We also believe that this tabular presentation will supplement for investors an understanding of our disclosures and real estate operating results. Gains or losses on sales of real estate and impairments of held for sale assets are related to corporate-level decisions to dispose of real estate. Gains or losses on early extinguishment of debt are related to corporate-level financing decisions focused on our capital structure strategy. Significant realized and unrealized gains or losses on non-real estate investments, impairments of real estate and non-real estate investments, and acceleration of stock compensation expense due to the resignation of an executive officer are not related to the operating performance of our real estate assets as they result from strategic, corporate-level non-real estate investment decisions and external market conditions. Impairments of non-real estate investments are not related to the operating performance of our real estate as they represent the write-down of non-real estate investments when their fair values decrease below their respective carrying values due to changes in general market or other conditions outside of our control. Significant items, whether a gain or loss, included in the tabular disclosure for current periods are described in further detail within this Item 2. Key items included in net income attributable to Alexandria’s common stockholders for the three and six months ended June 30, 2023 and 2022 and the related per share amounts were as follows (in millions, except per share amounts):


	Three Months Ended June 30,								Six Months Ended June 30,
	2023		2022		2023		2022		2023		2022		2023		2022
	Amount				Per Share – Diluted				Amount				Per Share – Diluted
Unrealized losses on non-real estate investments	$	(77.9)	$	(68.1)	$	(0.46)	$	(0.42)	$	(143.8)	$	(331.6)	$	(0.84)	$	(2.07)
Gain on sales of real estate	214.8		214.2		1.26		1.33		214.8		214.2		1.26		1.34
Impairment of non-real estate investments	(23.0)		—		(0.13)		—		(23.0)		—		(0.13)		—
Impairment of real estate	(168.6)		—		(0.99)		—		(168.6)		—		(0.99)		—
Loss on early extinguishment of debt	—		(3.3)		—		(0.02)		—		(3.3)		—		(0.02)
Total	$	(54.7)	$	142.8	$	(0.32)	$	0.89	$	(120.6)	$	(120.7)	$	(0.70)	$	(0.75)

Refer to Note 3 – “Investments in real estate” and Note 7 – “Investments” to our unaudited consolidated financial statements for addition information.

Same properties

We supplement an evaluation of our results of operations with an evaluation of operating performance of certain of our properties, referred to as Same Properties. For additional information on the determination of our Same Properties portfolio, refer to the definition of “Same property comparisons” in the “Non-GAAP measures and definitions” section within this Item 2. The following table presents information regarding our Same Properties for the three and six months ended June 30, 2023:


	June 30, 2023
	Three Months Ended	Six Months Ended
Percentage change in net operating income over comparable period from prior year	3.0%	3.4%
Percentage change in net operating income (cash basis) over comparable period from prior year	4.9%	6.5%
Operating margin	70%	70%
Number of Same Properties	336	303
RSF	34,655,179	31,191,131
Occupancy – current-period average	94.0%	94.4%
Occupancy – same-period prior-year average	95.2%	95.4%

The following table reconciles the number of Same Properties to total properties for the six months ended June 30, 2023:


Development – under construction						Properties
201 Brookline Avenue						1
15 Necco Street						1
751 Gateway Boulevard						1
325 Binney Street						1
1150 Eastlake Avenue East						1
9810 and 9820 Darnestown Road						2
99 Coolidge Avenue						1
500 North Beacon Street and 4 Kingsbury Avenue						2
9808 Medical Center Drive						1
6040 George Watts Hill Drive						1
1450 Owens Street						1
230 Harriet Tubman Way						1
4155 Campus Point Court						1
						15
Development – placed into service after January 1, 2022						Properties
825 and 835 Industrial Road						2
9950 Medical Center Drive						1
3115 Merryfield Row						1
8 and 10 Davis Drive						2
5 and 9 Laboratory Drive						2
10055 Barnes Canyon Road						1
10102 Hoyt Park Drive						1
						10
Redevelopment – under construction						Properties
840 Winter Street						1
9601 and 9603 Medical Center Drive						2
140 First Street						1
40, 50, and 60 Sylvan Road						3
Alexandria Center® for Advanced Technologies – Monte Villa Parkway						6
651 Gateway Boulevard						1
8800 Technology Forest Place						1
Canada						4
Other						2
						21


Redevelopment – placed into service after January 1, 2022						Properties
3160 Porter Drive						1
5505 Morehouse Drive						1
The Arsenal on the Charles						11
30-02 48th Avenue						1
2400 Ellis Road, 40 Moore Drive, and 14 TW Alexander Drive						3
20400 Century Boulevard						1
						18
Acquisitions after January 1, 2022						Properties
3301, 3303, 3305, and 3307 Hillview Avenue						4
8505 Costa Verde Boulevard and 4260 Nobel Drive						2
225 and 235 Presidential Way						2
104 TW Alexander Drive						4
One Hampshire Street						1
Intersection Campus						9
100 Edwin H. Land Boulevard						1
10010 and 10140 Campus Point Drive and 4275 Campus Point Court						3
446 and 458 Arsenal Street						2
35 Gatehouse Drive						1
1001 Trinity Street and 1020 Red River Street						2
Other						10
						41
Unconsolidated real estate JVs						4
Properties held for sale						2
Total properties excluded from Same Properties						111
Same Properties						303
Total properties in North America as of June 30, 2023						414

Comparison of results for the three months ended June 30, 2023 to the three months ended June 30, 2022

The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same Properties for the three months ended June 30, 2023, compared to the three months ended June 30, 2022 (dollars in thousands). Refer to the “Non-GAAP measures and definitions” section within this Item 2 for definitions of “Tenant recoveries” and “Net operating income” and their reconciliations from the most directly comparable financial measures presented in accordance with GAAP, income from rentals and net income, respectively.


	Three Months Ended June 30,
	2023		2022		$ Change		% Change
Income from rentals:
Same Properties	$	442,476	$	425,709	$	16,767	3.9	%
Non-Same Properties	95,413		59,358		36,055		60.7
Rental revenues	537,889		485,067		52,822		10.9

Same Properties	146,123		139,428		6,695		4.8
Non-Same Properties	20,327		16,464		3,863		23.5
Tenant recoveries	166,450		155,892		10,558		6.8

Income from rentals	704,339		640,959		63,380		9.9

Same Properties	225		262		(37)		(14.1)
Non-Same Properties	9,336		2,543		6,793		267.1
Other income	9,561		2,805		6,756		240.9

Same Properties	588,824		565,399		23,425		4.1
Non-Same Properties	125,076		78,365		46,711		59.6
Total revenues	713,900		643,764		70,136		10.9

Same Properties	174,562		163,089		11,473		7.0
Non-Same Properties	37,272		33,195		4,077		12.3
Rental operations	211,834		196,284		15,550		7.9

Same Properties	414,262		402,310		11,952		3.0
Non-Same Properties	87,804		45,170		42,634		94.4
Net operating income	$	502,066	$	447,480	$	54,586	12.2	%

Net operating income – Same Properties	$	414,262	$	402,310	$	11,952	3.0	%
Straight-line rent revenue	(22,440)		(22,798)		358		(1.6)
Amortization of acquired below-market leases	(8,183)		(13,643)		5,460		(40.0)
Net operating income – Same Properties (cash basis)	$	383,639	$	365,869	$	17,770	4.9	%

Income from rentals

Total income from rentals for the three months ended June 30, 2023 increased by $63.4 million, or 9.9%, to $704.3 million, compared to $641.0 million for the three months ended June 30, 2022, as a result of an increase in rental revenues and tenant recoveries, as discussed below.

Rental revenues

Total rental revenues for the three months ended June 30, 2023 increased by $52.8 million, or 10.9%, to $537.9 million, compared to $485.1 million for the three months ended June 30, 2022. The increase was primarily due to an increase in rental revenues from our Non-Same Properties related to 2.0 million RSF of development and redevelopment projects placed into service subsequent to April 1, 2022 and 13 operating properties aggregating 1.6 million RSF acquired subsequent to April 1, 2022.

Rental revenues from our Same Properties for the three months ended June 30, 2023 increased by $16.8 million, or 3.9%, to $442.5 million, compared to $425.7 million for the three months ended June 30, 2022. The increase was primarily due to rental rate increases on lease renewals and re-leasing of space since April 1, 2022.

Tenant recoveries

Tenant recoveries for the three months ended June 30, 2023 increased by $10.6 million, or 6.8%, to $166.5 million, compared to $155.9 million for the three months ended June 30, 2022. The increase was due to our Non-Same Properties related to our development and redevelopment projects placed into service and properties acquired subsequent to April 1, 2022, as discussed above under “Rental revenues,” and also from our Same Properties related to tenant recoveries from higher operating expenses, as described below.

Same Properties’ tenant recoveries for the three months ended June 30, 2023 increased by $6.7 million, or 4.8%, to $146.1 million, compared to $139.4 million for the three months ended June 30, 2022, primarily due to higher operating expenses during the three months ended June 30, 2023, as discussed under “Rental operations” below. As of June 30, 2023, 93% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent.

Other income

Other income for the three months ended June 30, 2023 increased by $6.8 million, or 240.9%, to $9.6 million, compared to $2.8 million for the three months ended June 30, 2022. The increase in other income was primarily due to an increase in interest income resulting from an increase in average interest rates earned from our money market accounts to over 4.0% during the three months ended June 30, 2023 compared to less than 1.0% during the three months ended June 30, 2022.

Rental operations

Total rental operating expenses for the three months ended June 30, 2023 increased by $15.6 million, or 7.9%, to $211.8 million, compared to $196.3 million for the three months ended June 30, 2022. The increase was partially due to incremental expenses related to our Non-Same Properties, which consist of development and redevelopment projects placed into service and acquired properties, as discussed above under “Rental revenues.”

Same Properties’ rental operating expenses increased by $11.5 million, or 7.0%, to $174.6 million during the three months ended June 30, 2023, compared to $163.1 million for the three months ended June 30, 2022. The increase was primarily the result of increases in (i) repair and maintenance expenses aggregating $4.3 million, primarily due to the timing of and higher rates for services, (ii) contractual costs aggregating $2.1 million, including security and janitorial services, primarily due to increases in rates; and (iii) higher property insurance expenses aggregating $1.8 million, primarily due to increases in insurance premiums.

General and administrative expenses

General and administrative expenses for the three months ended June 30, 2023 increased by $2.5 million, or 5.7%, to $45.9 million, compared to $43.4 million for the three months ended June 30, 2022. The increase was primarily due to increases in costs for services required to continue to support our operations in multiple markets, including development and redevelopment projects placed into service and properties acquired, as discussed above under “Rental revenues.” As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended June 30, 2023 and 2022 were 9.7% and 9.8%, respectively.

Interest expense

Interest expense for the three months ended June 30, 2023 and 2022 consisted of the following (dollars in thousands):


	Three Months Ended June 30,
Component	2023			2022			Change
Gross interest	$	108,746		$	92,459		$	16,287
Capitalized interest	(91,674)			(68,202)			(23,472)
Interest expense	$	17,072		$	24,257		$	(7,185)

Average debt balance outstanding(1)	$	11,346,604		$	10,300,789		$	1,045,815
Weighted-average annual interest rate(2)	3.8		%	3.6		%	0.2		%

(1)Represents the average debt balance outstanding during the respective periods.

(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.

The net change in interest expense during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, resulted from the following (dollars in thousands):


Component	Interest Rate(1)			Effective Date	Change
Increases in interest incurred due to:
Issuances of debt:


$500 million unsecured senior notes payable due 2053		5.26	%	February 2023	$	6,448
$500 million unsecured senior notes payable due 2035 – green bond		4.88	%	February 2023	5,959
Increase in construction borrowing under secured notes payable		8.08	%		1,406
Rate increases on borrowings under commercial paper program and from unsecured senior line of credit					1,781
Other increase in interest					693






Change in gross interest					16,287
Increase in capitalized interest					(23,472)
Total change in interest expense					$	(7,185)

(1)Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.

Depreciation and amortization

Depreciation and amortization expense for the three months ended June 30, 2023 increased by $31.5 million, or 13.0%, to $273.6 million, compared to $242.1 million for the three months ended June 30, 2022. The increase was primarily due to additional depreciation from development and redevelopment projects placed into service and properties acquired, as discussed above under “Rental revenues.”

Impairment of real estate

During the three months ended June 30, 2023, we recognized real estate impairment charges aggregating $168.6 million, primarily to reduce the carrying amount of a three-building office campus in our Route 128 submarket classified as held for sale during this period, to its current fair value less costs to sell. For more information, refer to the “Sales of real estate assets and impairment charges” section of Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report.

Loss on early extinguishment of debt

During the three months ended June 30, 2022, we recognized a loss on early extinguishment of debt of $3.3 million, including a prepayment penalty and the write-off of unamortized loan fees, related to the repayment of two secured notes payable.

Investment loss

During the three months ended June 30, 2023, we recognized an investment loss aggregating $78.3 million. This loss comprised unrealized losses and reclassifications of $77.9 million resulting from a $47.3 million decrease primarily in the fair value of our investments in privately held entities that report NAV and a $30.6 million reclassification of unrealized gains recognized in prior periods into realized gains upon the sales of investments during the three months ended June 30, 2023. The investment loss also included realized losses of $371 thousand, primarily comprising impairment charges of $23.0 million mainly related to three non-real estate investments in privately held entities that do not report NAV, offset by the realized gains related to the sales of investments and distributions received during the three months ended June 30, 2023.

During the three months ended June 30, 2022, we recognized investment loss aggregating $39.5 million, which consisted of $68.1 million of unrealized losses and $28.6 million of realized gains. For more information about our investments, refer to Note 7 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report.

Gain on sales of real estate

During the three months ended June 30, 2023, we recognized $214.8 million of gains related to the completion of six real estate dispositions. The gains were classified in gain on sales of real estate within our consolidated statements of operations for the three months ended June 30, 2023.

During the three months ended June 30, 2022, we recognized $214.2 million of gains primarily related to the completion of 14 real estate dispositions. The gains were classified in gain on sales of real estate within our consolidated statements of operations for the three months ended June 30, 2022.

For more information about our sales of real estate, refer to the “Sales of real estate assets and impairment charges” section of Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report.

Other comprehensive income

Total other comprehensive income for the three months ended June 30, 2023 increased by $10.1 million to aggregate net unrealized gains of $3.9 million, compared to net unrealized losses of $6.1 million for the three months ended June 30, 2022, primarily related to unrealized gains on foreign currency translation related to our operations in Canada.

Comparison of results for the six months ended June 30, 2023 to the six months ended June 30, 2022

The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same Properties for the six months ended June 30, 2023, compared to the six months ended June 30, 2022 (dollars in thousands). Refer to the “Non-GAAP measures and definitions” section within this Item 2 for definitions of “Tenant recoveries” and “Net operating income” and their reconciliations from the most directly comparable financial measures presented in accordance with GAAP, income from rentals and net income, respectively.


	Six Months Ended June 30,
	2023		2022		$ Change		% Change
Income from rentals:
Same Properties	$	807,428	$	775,081	$	32,347	4.2	%
Non-Same Properties	248,763		179,523		69,240		38.6
Rental revenues	1,056,191		954,604		101,587		10.6

Same Properties	267,972		250,454		17,518		7.0
Non-Same Properties	68,125		48,455		19,670		40.6
Tenant recoveries	336,097		298,909		37,188		12.4

Income from rentals	1,392,288		1,253,513		138,775		11.1

Same Properties	351		446		(95)		(21.3)
Non-Same Properties	22,056		4,870		17,186		352.9
Other income	22,407		5,316		17,091		321.5

Same Properties	1,075,751		1,025,981		49,770		4.9
Non-Same Properties	338,944		232,848		106,096		45.6
Total revenues	1,414,695		1,258,829		155,866		12.4

Same Properties	317,876		293,222		24,654		8.4
Non-Same Properties	100,891		84,390		16,501		19.6
Rental operations	418,767		377,612		41,155		10.9

Same Properties	757,875		732,759		25,116		3.4
Non-Same Properties	238,053		148,458		89,595		60.4
Net operating income	$	995,928	$	881,217	$	114,711	13.0	%

Net operating income – Same Properties	$	757,875	$	732,759	$	25,116	3.4	%
Straight-line rent revenue	(40,145)		(49,278)		9,133		(18.5)
Amortization of acquired below-market leases	(14,914)		(23,300)		8,386		(36.0)
Net operating income – Same Properties (cash basis)	$	702,816	$	660,181	$	42,635	6.5	%

Income from rentals

Total income from rentals for the six months ended June 30, 2023 increased by $138.8 million, or 11.1%, to $1.4 billion, compared to $1.3 billion for the six months ended June 30, 2022, as a result of increase in rental revenues and tenant recoveries, as discussed below.

Rental revenues

Total rental revenues for the six months ended June 30, 2023 increased by $101.6 million, or 10.6%, to $1.1 billion, compared to $1.0 billion for the six months ended June 30, 2022. The increase was primarily due to an increase in rental revenues from our Non-Same Properties related to 4.0 million RSF of development and redevelopment projects placed into service subsequent to January 1, 2022 and 41 operating properties aggregating 4.2 million RSF acquired subsequent to January 1, 2022.

Rental revenues from our Same Properties for the six months ended June 30, 2023 increased by $32.3 million, or 4.2%, to $807.4 million, compared to $775.1 million for the six months ended June 30, 2022. The increase was primarily due to rental rate increases on lease renewals and re-leasing of space since January 1, 2022.

Tenant recoveries

Tenant recoveries for the six months ended June 30, 2023 increased by $37.2 million, or 12.4%, to $336.1 million, compared to $298.9 million for the six months ended June 30, 2022. This increase was partially from our Non-Same Properties related to our development and redevelopment projects placed into service and properties acquired subsequent to January 1, 2022, as discussed above under “Rental revenues.”

Same Properties’ tenant recoveries for the six months ended June 30, 2023 increased by $17.5 million, or 7.0%, to $268.0 million, compared to $250.5 million for the six months ended June 30, 2022, primarily due to higher operating expenses during the six months ended June 30, 2023, as discussed under “Rental operations” below. As of June 30, 2023, 93% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent.

Other income

Other income for the six months ended June 30, 2023 and 2022 was $22.4 million and $5.3 million, respectively, which primarily consisted of construction management fees and interest income earned during each respective period. The increase in other income was primarily due to a $5.3 million leasing fee related to a joint venture in our Seattle market and an increase in interest income resulting from an increase in average interest rates earned from our money market accounts to over 4.0% during the six months ended June 30, 2023, compared to less than 1.0% during the six months ended June 30, 2022.

Rental operations

Total rental operating expenses for the six months ended June 30, 2023 increased by $41.2 million, or 10.9%, to $418.8 million, compared to $377.6 million for the six months ended June 30, 2022. The increase was partially due to incremental expenses related to our Non-Same Properties, which consist of development and redevelopment projects placed into service and acquired properties, as discussed above under “Rental revenues.”

Same Properties’ rental operating expenses increased by $24.7 million, or 8.4%, to $317.9 million during the six months ended June 30, 2023, compared to $293.2 million for the six months ended June 30, 2022. The increase was primarily the result of increases in (i) repair and maintenance expenses aggregating $7.0 million, primarily due to the timing of and higher rates for services; (ii) contractual costs aggregating $2.8 million, including security and janitorial services, primarily due to increases in rates; and (iii) property insurance expenses aggregating $2.8 million, primarily due to increases in insurance premiums.

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2023 increased by $9.8 million, or 11.6%, to $94.1 million, compared to $84.3 million for the six months ended June 30, 2022. The increase was primarily due to annual compensation increases and increases in costs for services required to continue to support our operations in multiple markets, including development and redevelopment projects placed into service and properties acquired, as discussed above under “Rental revenues.” As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended June 30, 2023 and 2022 were 9.7% and 9.8%, respectively.

Interest expense

Interest expense for the six months ended June 30, 2023 and 2022 consisted of the following (dollars in thousands):


	Six Months Ended June 30,
Component	2023			2022			Change
Gross interest	$	209,570		$	179,662		$	29,908
Capitalized interest	(178,744)			(125,965)			(52,779)
Interest expense	$	30,826		$	53,697		$	(22,871)

Average debt balance outstanding(1)	$	11,001,895		$	10,188,517		$	813,378
Weighted-average annual interest rate(2)	3.8		%	3.5		%	0.3		%

(1)Represents the average debt balance outstanding during the respective periods.

(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.

The net change in interest expense during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, resulted from the following (dollars in thousands):


Component	Interest Rate(1)			Effective Date	Change
Increases in interest incurred due to:
Issuances of debt:
$1.0 billion unsecured senior notes payable		3.63	%	February 2022	$	4,450
$800 million unsecured senior notes payable – green bond		3.07	%	February 2022	2,974
$500 million unsecured senior notes payable due 2053		5.26	%	February 2023	8,938
$500 million unsecured senior notes payable due 2035 – green bond		4.88	%	February 2023	9,671
Increase in construction borrowing under secured notes payable		8.08	%		2,470
Rate increases on borrowings under commercial paper program and from unsecured senior line of credit					3,052
Other increase in interest					1,613
Total increases					33,168
Decreases in interest incurred due to:


Repayment of secured notes payable		3.40	%	April 2022	(1,787)
Lower average outstanding balances under commercial paper program and on unsecured senior line of credit					(1,473)
Total decreases					(3,260)
Change in gross interest					29,908
Increase in capitalized interest					(52,779)
Total change in interest expense					$	(22,871)

(1)Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.

Depreciation and amortization

Depreciation and amortization expense for the six months ended June 30, 2023 increased by $56.1 million, or 11.6%, to $538.9 million, compared to $482.7 million for the six months ended June 30, 2022. The increase was primarily due to additional depreciation from development and redevelopment projects placed into service and properties acquired, as discussed above under “Rental revenues.”

Impairment of real estate

During the six months ended June 30, 2023, we recognized real estate impairment charges aggregating $168.6 million, primarily to reduce the carrying amount of a three-building office campus in our Route 128 submarket to its current fair value less costs to sell, upon its classification as held for sale. For more information, refer to the “Sales of real estate assets and impairment charges” section of Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report.

Loss on early extinguishment of debt

During the six months ended June 30, 2022, we recognized a loss on early extinguishment of debt of $3.3 million, including a prepayment penalty and the write-off of unamortized loan fees, related to the repayment of two secured notes payable.

Investment loss

During the six months ended June 30, 2023, we recognized an investment loss aggregating $123.4 million. This loss comprised unrealized losses and reclassifications of $143.8 million resulting from a $85.1 million decrease primarily in the fair value of our investments in privately held entities that report NAV and a $58.6 million reclassification of unrealized gains recognized in prior periods into realized gains upon the sales of investments during the six months ended June 30, 2023. The investment loss also included realized gains of $20.4 million, primarily comprising realized gains on the sales of investments and distributions received, partially offset by impairment charges of $23.0 million primarily related to three non-real estate investments in privately held entities that do not report NAV.

During the six months ended June 30, 2022, we recognized investment loss aggregating $279.8 million, which consisted of $51.8 million of realized gains and $331.6 million of unrealized losses.

For more information about our investments, refer to Note 7 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report. For our impairments accounting policy, refer to the “Investments” section of Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements under Item 1 of this report.

Gain on sales of real estate

During the six months ended June 30, 2023, we recognized $214.8 million of gains related to the completion of six real estate dispositions. The gains were classified in gain on sales of real estate within our consolidated statements of operations for the six months ended June 30, 2023.

During the six months ended June 30, 2022, we recognized $214.2 million of gains primarily related to the completion of 14 real estate dispositions. The gains were classified in gain on sales of real estate within our consolidated statements of operations for the six months ended June 30, 2022.

Other comprehensive income

Total other comprehensive income for the six months ended June 30, 2023 increased by $8.8 million to aggregate net unrealized gains of $4.2 million, compared to net unrealized losses of $4.6 million for the six months ended June 30, 2022, primarily related to unrealized gains on foreign currency translation related to our operations in Canada.

Summary of capital expenditures

Our construction spending for the six months ended June 30, 2023 and projected spending for the remainder of the year ending December 31, 2023 consisted of the following (in thousands):


	Six Months Ended June 30, 2023		Projected Midpoint for the Year Ending December 31, 2023
Construction spending(1)	$	1,870,874	$	3,471,000	(2)
Contribution from existing real estate joint ventures as of June 30, 2023		(215,557)		(536,000)
Total construction spending	$	1,655,317	$	2,935,000
Guidance range			$2,785,000 – $3,085,000

(1)Includes our contributions into unconsolidated real estate joint ventures related to construction.

(2)Includes projected revenue-enhancing/repositioning capital expenditures and non-revenue-enhancing capital expenditures of $147 million and $60 million,

Projected capital contributions from partners in consolidated real estate joint ventures to fund construction

The following table summarizes projected capital contributions from partners in our consolidated joint ventures to fund construction through 2026 (in thousands):


Contributing from Partners in Our Existing Consolidated Real Estate Joint Ventures
Projected timing	Amount(1)
Three months ending September 30, 2023 and three months ending December 31, 2023	$	320,000
2024 Through 2026	1,019,000
Total	$	1,339,000

(1)Amounts represent reductions to our consolidated construction spending.

Capitalization of interest

Our construction spending includes capitalized interest. The table below provides key categories of interest capitalized during the six months ended June 30, 2023:


	Percentage of Total Capitalized Interest
Value-creation pipeline: development and redevelopments		87	%
Smaller redevelopment and repositioning capital projects		13
		100	%

The table below provides categories of additional operating RSF under our value-creation pipeline as of June 30, 2023, of which 68% of RSF is within our existing mega campuses:


	Upon Completion of Construction
	Additional Operating RSF	Growth in Operating RSF

Under construction and committed near-term projects(1)	6,713,858	82%
Value-add pre-construction: primarily mega campus entitlement, permitting, design, and site work	27,018,167
Value-creation pipeline: development and redevelopments	33,732,025

(1)Represents projects under construction aggregating 5.3 million RSF and four near-term projects aggregating 1.4 million RSF expected to commence construction during the next three quarters after June 30, 2023, which are 70% leased/negotiating and are expected to generate $605 million in incremental net operating income from the third quarter of 2023 through the second quarter of 2026.

Projected results

We present updated guidance for EPS attributable to Alexandria’s common stockholders – diluted, funds from operations per share attributable to Alexandria’s common stockholders – diluted, and funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted, based on our current view of existing market conditions and other assumptions for the year ending December 31, 2023 as set forth in the tables below. The tables below also provide a reconciliation of EPS attributable to Alexandria’s common stockholders – diluted, the most directly comparable financial measure presented in accordance with GAAP, to funds from operations per share and funds from operations per share, as adjusted, non-GAAP measures, and other key assumptions included in our updated guidance for the year ending December 31, 2023. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of “Forward-looking statements” within this Item 2.


Projected 2023 Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted	As of 7/24/23		As of 4/24/23		Key Changes
Earnings per share(1)	$2.72 to $2.78		$2.21 to $2.31
Depreciation and amortization of real estate assets		5.55		5.55
Gain on sales of real estate		(1.26)		—	(2)
Impairment of real estate – rental properties		0.98		0.81
Allocation of unvested restricted stock awards		(0.04)		(0.04)
Funds from operations per share(3)	$7.95 to $8.01		$8.53 to $8.63
Unrealized losses on non-real estate investments		0.84		0.39

Impairment of non-real estate investments		0.13		—	(2)
Impairment of real estate		0.02		—


Allocation to unvested restricted stock awards		(0.01)		(0.01)

Funds from operations per share, as adjusted(3)	$8.93 to $8.99		$8.91 to $9.01		No change to midpoint; range narrowed by 4 cents
Midpoint		$8.96		$8.96

(1)Excludes unrealized gains or losses after June 30, 2023 that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.

(2)Refer to the “Sales of real estate assets and impairment charges” section of Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

(3)Refer to the definition of “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information.


Key Assumptions(1) (Dollars in millions)		As of 7/24/2023						As of 4/24/23
	Low			High			Low			High			Key Changes

Occupancy percentage for operating properties in North America as of December 31, 2023		94.6%			95.6%			94.6%			95.6%			No change
Lease renewals and re-leasing of space:
Rental rate increases		28.0%			33.0%			28.0%			33.0%
Rental rate increases (cash basis)		12.0%			17.0%			12.0%			17.0%
Same property performance:
Net operating income increases		2.0%			4.0%			2.0%			4.0%
Net operating income increases (cash basis)		4.0%			6.0%			4.0%			6.0%
Straight-line rent revenue		$	130		$	145		$	130		$	145
General and administrative expenses		$	183		$	193		$	183		$	193
Capitalization of interest		$	342		$	362		$	342		$	362
Interest expense		$	74		$	94		$	74		$	94

(1)Our assumptions presented in the table above are subject to a number of variables and uncertainties, including those discussed as “Forward-looking statements” under Part I; and “Item 1A. Risk factors” and “Item 7. Management’s discussion and analysis of financial condition and results of operations” of our annual report on Form 10-K for the year ended December 31, 2022, as well as in “Item 1A. Risk factors” within “Part II – Other information” of this quarterly report on Form 10-Q.


Key Credit Metrics	As of 7/24/2023	As of 4/24/23	Key Changes

Net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2023 annualized	Less than or equal to 5.1x	Less than or equal to 5.1x	No change
Fixed-charge coverage ratio – fourth quarter of 2023 annualized	4.5x to 5.0x	4.5x to 5.0x

Consolidated and unconsolidated real estate joint ventures

We present components of balance sheet and operating results information for the noncontrolling interest share of our consolidated real estate joint ventures and for our share of investments in unconsolidated real estate joint ventures to help investors estimate balance sheet and operating results information related to our partially owned entities. These amounts are estimated by computing, for each joint venture that we consolidate in our financial statements, the noncontrolling interest percentage of each financial item to arrive at the cumulative noncontrolling interest share of each component presented. In addition, for our real estate joint ventures that we do not control and do not consolidate, we apply our economic ownership percentage to the unconsolidated real estate joint ventures to arrive at our proportionate share of each component presented. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for further discussion.


Consolidated Real Estate Joint Ventures
Property/Market/Submarket	Noncontrolling(1) Interest Share				Operating RSF at 100%
50 and 60 Binney Street/Greater Boston/Cambridge/Inner Suburbs		66.0	%			532,395
75/125 Binney Street/Greater Boston/Cambridge/Inner Suburbs		60.0	%			388,270
100 and 225 Binney Street and 300 Third Street/Greater Boston/Cambridge/Inner Suburbs		70.0	%			870,106
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs		25.0	%			—	(2)
15 Necco Street/Greater Boston/Seaport Innovation District		32.7	%	(3)		—	(2)
Other joint venture/Greater Boston		39.1	%			—	(2)
Alexandria Center® for Science and Technology – Mission Bay/San Francisco Bay Area/Mission Bay(4)		75.0	%			1,005,879
1450 Owens Street/San Francisco Bay Area/Mission Bay		53.6	%	(5)		—	(2)
601, 611, 651(2), 681, 685, and 701 Gateway Boulevard/San Francisco Bay Area/ South San Francisco		50.0	%			785,444
751 Gateway Boulevard/San Francisco Bay Area/South San Francisco		49.0	%			—	(2)
211(2) and 213 East Grand Avenue/San Francisco Bay Area/South San Francisco		70.0	%			300,930
500 Forbes Boulevard/San Francisco Bay Area/South San Francisco		90.0	%			155,685
Alexandria Center® for Life Science – Millbrae/San Francisco Bay Area/South San Francisco		53.8	%			—	(2)
3215 Merryfield Row/San Diego/Torrey Pines		70.0	%			170,523
Campus Point by Alexandria/San Diego/University Town Center(6)		45.0	%			1,337,916
5200 Illumina Way/San Diego/University Town Center		49.0	%			792,687
9625 Towne Centre Drive/San Diego/University Town Center		70.0	%			163,648
SD Tech by Alexandria/San Diego/Sorrento Mesa(7)		50.0	%			877,103
Pacific Technology Park/San Diego/Sorrento Mesa		50.0	%			544,352
Summers Ridge Science Park/San Diego/Sorrento Mesa(8)		70.0	%			316,531
1201 and 1208 Eastlake Avenue East and 199 East Blaine Street /Seattle/Lake Union		70.0	%			321,218
400 Dexter Avenue North/Seattle/Lake Union		70.0	%			290,754
800 Mercer Street/Seattle/Lake Union		40.0	%			—	(2)

Unconsolidated Real Estate Joint Ventures
Property/Market/Submarket	Our Ownership Share(9)				Operating RSF at 100%
1655 and 1725 Third Street/San Francisco Bay Area/Mission Bay		10.0	%			586,208
1401/1413 Research Boulevard/Maryland/Rockville		65.0	%	(10)		(11)
1450 Research Boulevard/Maryland/Rockville		73.2	%	(10)		42,679
101 West Dickman Street/Maryland/Beltsville		57.9	%	(10)		135,423

(1)In addition to the consolidated real estate joint ventures listed, various joint venture partners hold insignificant noncontrolling interests in two other real estate joint ventures in North America.

(2)Represents a property currently under construction or in our value-creation pipeline. Refer to the sections under “New Class A/A+ development and redevelopment properties” within this Item 2 for additional details.

(3)The noncontrolling interest share is expected to increase to 43% as one of our joint venture partners contributes the remaining costs to complete the project over time.

(4)Includes 409 and 499 Illinois Street, 1500 and 1700 Owens Street, and 455 Mission Bay Boulevard South.

(5)The noncontrolling interest share of our joint venture partner is anticipated to increase to 75% as our partner contributes the remaining cost to complete the project over time.

(6)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4135, 4155, 4161, 4224, and 4242 Campus Point Court.

(7)Includes 9605, 9645, 9675, 9685, 9725, 9735, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 Barnes Canyon Road.

(8)Includes 9965, 9975, 9985, and 9995 Summers Ridge Road.

(9)In addition to the unconsolidated real estate joint ventures listed, we hold an interest in one other insignificant unconsolidated real estate joint venture in North America.

(10)Represents a joint venture with a local real estate operator in which our joint venture partner manages the day-to-day activities that significantly affect the economic performance of the joint venture.

(11)Represents a joint venture with a distinguished retail real estate developer for a retail shopping center aggregating 84,837 RSF.

The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of June 30, 2023 (dollars in thousands):


	Maturity Date			Stated Rate		Interest Rate(1)		At 100%				Our Share
Unconsolidated Joint Venture			Aggregate Commitment		Debt Balance(2)
1401/1413 Research Boulevard		12/23/24		2.70%		3.31	%	$	28,500	$	28,244	65.0%
1655 and 1725 Third Street		3/10/25		4.50%		4.57	%	600,000		599,293		10.0%
101 West Dickman Street		11/10/26		SOFR+1.95%	(3)	7.11	%	26,750		13,107		57.9%
1450 Research Boulevard		12/10/26		SOFR+1.95%	(3)	7.17	%	13,000		6,383		73.2%
								$	668,250	$	647,027

(1)Includes interest expense and amortization of loan fees.

(2)Represents outstanding principal, net of unamortized deferred financing costs, as of June 30, 2023.

(3)This loan is subject to a fixed SOFR floor rate of 0.75%.

The following tables present information related to the operating results and financial positions of our consolidated and unconsolidated real estate joint ventures as of and for the three and six months ended June 30, 2023 (in thousands):



	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures				Our Share of Unconsolidated Real Estate Joint Ventures
	June 30, 2023				June 30, 2023
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
Total revenues	$	101,344	$	203,312	$	2,682	$	5,399
Rental operations	(29,202)		(58,890)		(768)		(1,550)
	72,142		144,422		1,914		3,849
General and administrative	(350)		(817)		(34)		(66)
Interest	(5)		(10)		(844)		(1,694)
Depreciation and amortization of real estate assets	(28,220)		(56,398)		(855)		(1,714)

Fixed returns allocated to redeemable noncontrolling interests(1)	201		402		—		—
	$	43,768	$	87,599	$	181	$	375

Straight-line rent and below-market lease revenue	$	4,133	$	8,834	$	297	$	583
Funds from operations(2)	$	71,988	$	143,997	$	1,036	$	2,089

(1)Represents an allocation of joint venture earnings to redeemable noncontrolling interests primarily in one property in our South San Francisco submarket. These redeemable noncontrolling interests earn a fixed return on their investment rather than participate in the operating results of the property.

(2)Refer to the definition of “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” in the “Non-GAAP measures and definitions” section within this Item 2 for the definition and the reconciliation from the most directly comparable financial measure, presented in accordance with GAAP.


	As of June 30, 2023
	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures		Our Share of Unconsolidated Real Estate Joint Ventures
Investments in real estate	$	3,696,860	$	117,715
Cash, cash equivalents, and restricted cash	129,240		6,488
Other assets	390,017		11,477
Secured notes payable	(22,822)		(90,557)
Other liabilities	(223,481)		(7,322)
Redeemable noncontrolling interests	(52,628)		—
	$	3,917,186	$	37,801

During the six months ended June 30, 2023 and 2022, our consolidated real estate joint ventures distributed an aggregate of $134.6 million and $92.1 million, respectively, to our joint venture partners. Refer to our consolidated statements of cash flows and Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Investments

We hold investments in publicly traded companies and privately held entities primarily involved in the life science, agtech, and technology industries. The tables below summarize components of our investment income (loss) and non-real estate investments (in thousands). For additional information, refer to Note 7 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report.


	June 30, 2023
	Three Months Ended			Six Months Ended			Year Ended December 31, 2022
Realized (losses) gains	$	(371)	(1)	$	20,373	(1)	$	80,435
Unrealized losses	(77,897)		(2)	(143,752)		(2)	(412,193)		(3)
Investment loss	$	(78,268)		$	(123,379)		$	(331,758)


	June 30, 2023									December 31, 2022
Investments	Cost			Unrealized Gains		Unrealized Losses		Carrying Amount		Carrying Amount
Publicly traded companies	$	201,526		$	58,748	$	(109,382)	$	150,892	$	207,139
Entities that report NAV	470,731			218,001		(11,361)		677,371		759,752
Entities that do not report NAV:
Entities with observable price changes	105,605			96,529		(1,224)		200,910		193,784
Entities without observable price changes	393,065			—		—		393,065		388,940
Investments accounted for under the equity method of accounting	N/A			N/A		N/A		73,756		65,459
June 30, 2023	$	1,170,927	(4)	$	373,278	$	(121,967)	$	1,495,994	$	1,615,074

December 31, 2022	$	1,152,613		$	506,404	$	(109,402)	$	1,615,074


Public/Private Mix (Cost)						Tenant/Non-Tenant Mix (Cost)

(1)Includes impairments of $23.0 million primarily related to three non-real estate investments in privately held entities that do not report NAV.

(2)Consists of unrealized losses of $47.3 million and $85.1 million primarily resulting from the decrease in the fair value of our investments in privately held entities that report NAV and $30.6 million and $58.6 million of accounting reclassifications of unrealized gains recognized in prior periods into realized gains upon our sales of investments during the three and six months ended June 30, 2023, respectively.

(3)Consists of unrealized losses of $274.2 million primarily resulting from the decrease in the fair value of our investments in publicly traded companies and $138.0 million of accounting reclassifications of unrealized gains recognized in prior periods into realized gains upon our sales of investments during the year ended December 31, 2022.

(4)Represents 2.8% of gross assets as of June 30, 2023.

Liquidity


Liquidity			Minimal Outstanding Borrowings and Significant Availability on Unsecured Senior Line of Credit

$6.3B			(in millions)





(In millions)
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program	$	5,000
Outstanding forward equity sales agreements(1)	103
Cash, cash equivalents, and restricted cash	960
Remaining construction loan commitments	103
Investments in publicly traded companies	151
Liquidity as of June 30, 2023	$	6,317

(1)Represents expected net proceeds from the future settlement of 699 thousand shares of common stock under forward equity sales agreements after underwriter discounts.

We expect to meet certain long-term liquidity requirements, such as requirements for development, redevelopment, other construction projects, capital improvements, tenant improvements, property acquisitions, leasing costs, non-revenue-enhancing capital expenditures, scheduled debt maturities, distributions to noncontrolling interests, and payment of dividends through net cash provided by operating activities, periodic asset sales, strategic real estate joint ventures, long-term secured and unsecured indebtedness, borrowings under our unsecured senior line of credit, issuances under our commercial paper program, and issuances of additional debt and/or equity securities.

We also expect to continue meeting our short-term liquidity and capital requirements, as further detailed in this section, generally through our working capital and net cash provided by operating activities. We believe that the net cash provided by operating activities will continue to be sufficient to enable us to make the distributions necessary to continue qualifying as a REIT.

For additional information on our liquidity requirements related to our contractual obligations and commitments, refer to Note 5 – “Leases” and Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements under Item 1 of this report.

Over the next several years, our balance sheet, capital structure, and liquidity objectives are as follows:

Retain cash flows from operating activities after payment of dividends and distributions to noncontrolling interests for investment in development and redevelopment projects and/or acquisitions;
Maintain significant balance sheet liquidity;
Improve credit profile and relative long-term cost of capital;
Maintain diverse sources of capital, including sources from net cash provided by operating activities, unsecured debt, secured debt, selective real estate asset sales, strategic real estate joint ventures, non-real estate investment sales, and common stock;
Maintain commitment to long-term capital to fund growth;
Maintain prudent laddering of debt maturities;
Maintain solid credit metrics;
Prudently manage variable-rate debt exposure;
Maintain a large, unencumbered asset pool to provide financial flexibility;
Fund common stock dividends and distributions to noncontrolling interests from net cash provided by operating activities;
Manage a disciplined level of value-creation projects as a percentage of our gross real estate assets; and
Maintain high levels of pre-leasing and percentage leased in value-creation projects.

The following table presents the availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program; outstanding forward equity sales agreements; cash, cash equivalents, and restricted cash; availability under our secured construction loan; and investments in publicly traded companies as of June 30, 2023 (in thousands):


Description	Stated Rate	Aggregate Commitments		Outstanding Balance(1)		Remaining Commitments/Liquidity
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program	SOFR+0.835%	$	5,000,000	$	—	$	5,000,000
Outstanding forward equity sales agreements(2)						102,781
Cash, cash equivalents, and restricted cash						960,290
Remaining construction loan commitments	SOFR+2.70%	$	195,300	$	91,290	103,034
Investments in publicly traded companies						150,892
Liquidity as of June 30, 2023						$	6,316,997

(1)Represents outstanding principal, net of unamortized deferred financing costs, as of June 30, 2023.

(2)Represents expected net proceeds from the future settlement of 699 thousand shares of common stock under forward equity sales agreements after underwriter discounts.

Cash, cash equivalents, and restricted cash

As of June 30, 2023 and December 31, 2022, we had $1.0 billion and $858.0 million, respectively, of cash, cash equivalents, and restricted cash. We expect existing cash, cash equivalents, and restricted cash, net cash provided by operating activities, proceeds from real estate asset sales, sales of partial interests, strategic real estate joint ventures, non-real estate investment sales, borrowings under our unsecured senior line of credit, issuances under our commercial paper program, issuances of unsecured senior notes payable, borrowings under our secured construction loans, and issuances of common stock to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends, distributions to noncontrolling interests, scheduled debt repayments, acquisitions, and certain capital expenditures, including expenditures related to construction activities.

Cash flows

We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following table summarizes changes in our cash flows for the six months ended June 30, 2023 and 2022 (in thousands):


	Six Months Ended June 30,
	2023		2022		Change
Net cash provided by operating activities	$	784,043	$	530,120	$	253,923
Net cash used in investing activities	$	(1,434,101)	$	(3,096,199)	$	1,662,098
Net cash provided by financing activities	$	752,558	$	2,668,900	$	(1,916,342)

Operating activities

Cash flows provided by operating activities are primarily dependent upon the occupancy level of our asset base, the rental rates of our leases, the collectibility of rent and recovery of operating expenses from our tenants, the timing of completion of development and redevelopment projects, and the timing of acquisitions and dispositions of operating properties. Net cash provided by operating activities for the six months ended June 30, 2023 increased by $253.9 million to $784.0 million, compared to $530.1 million for the six months ended June 30, 2022. The increase was primarily attributable to the following since January 1, 2022: (i) cash flows generated from our highly leased development and redevelopment projects recently placed into service, (ii) income-producing acquisitions, and (iii) increases in rental rates on lease renewals and re-leasing of space.

Investing activities

Cash used in investing activities for the six months ended June 30, 2023 and 2022 consisted of the following (in thousands):


	Six Months Ended June 30,				Increase (Decrease)
	2023		2022
Sources of cash from investing activities:
Proceeds from sales of real estate	$	592,630	$	375,379	$	217,251
Sales of and distributions from non-real estate investments	109,335		90,228		19,107
Change in escrow deposits	13,663		138,440		(124,777)
Return of capital from unconsolidated real estate joint ventures	—		471		(471)
	715,628		604,518		111,110
Uses of cash for investing activities:
Purchases of real estate	233,317		2,182,699		(1,949,382)
Additions to real estate	1,812,241		1,377,589		434,652
Investments in unconsolidated real estate joint ventures	332		336		(4)
Additions to non-real estate investments	103,839		140,093		(36,254)
	2,149,729		3,700,717		(1,550,988)

Net cash used in investing activities	$	1,434,101	$	3,096,199	$	(1,662,098)

The decrease in net cash used in investing activities for the six months ended June 30, 2023 when compared to the six months ended June 30, 2022 was primarily due to a decreased use of cash for purchases of real estate, partially offset by increased use of cash for additions to real estate. Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Financing activities

Cash flows provided by financing activities for the six months ended June 30, 2023 and 2022 consisted of the following (in thousands):


	Six Months Ended June 30,
	2023		2022		Change
Borrowings from secured notes payable	$	32,550	$	15,973	$	16,577
Repayments of borrowings from secured notes payable	—		(906)		906
Payment for the defeasance of secured notes payable	—		(198,304)		198,304
Proceeds from issuance of unsecured senior notes payable	996,205		1,793,318		(797,113)
Borrowings from unsecured senior line of credit	375,000		1,180,000		(805,000)
Repayments of borrowings from unsecured senior line of credit	(375,000)		(1,180,000)		805,000
Proceeds from issuances under commercial paper program	1,705,000		7,410,000		(5,705,000)
Repayments of borrowings under commercial paper program	(1,705,000)		(7,530,000)		5,825,000
Payments of loan fees	(10,113)		(17,596)		7,483
Changes related to debt	1,018,642		1,472,485		(453,843)

Contributions from and sales of noncontrolling interests	299,531		1,029,134		(729,603)
Distributions to and purchases of noncontrolling interests	(134,617)		(92,224)		(42,393)
Proceeds from issuance of common stock	—		646,316		(646,316)
Dividends on common stock	(418,477)		(371,547)		(46,930)
Taxes paid related to net settlement of equity awards	(12,521)		(15,264)		2,743
Net cash provided by financing activities	$	752,558	$	2,668,900	$	(1,916,342)

Capital resources

We expect that our principal liquidity needs for the year ending December 31, 2023 will be satisfied by the multiple sources of capital shown in the table below. There can be no assurance that our sources and uses of capital will not be materially higher or lower than these expectations. Key updates to the midpoints of our guidance ranges for our 2023 key sources and uses of capital include the following:

During the three months ended June 30, 2023, we pivoted our strategy toward harvesting value by selling 100% interests in non-core properties and/or properties not integral to our mega campus strategy in lieu of seeking a new real estate joint venture partner for one of our active development projects.
This resulted in increases to (i) proceeds from dispositions and sales of partial interests by $225 million, and (ii) our share of construction spending by $210 million, as this amount was previously expected to be funded by a future joint venture partner.
The revised midpoint to our 2023 guidance range for dispositions and sales of partial interests is $1.75 billion.
The revised midpoint to our 2023 guidance range for construction spending is $2.9 billion. Total 2023 construction spending before contributions from real estate joint venture partners remains unchanged from our prior forecast at $3.5 billion. Refer to “Summary of capital expenditures” within this Item 2 for additional details.


Key Sources and Uses of Capital (In millions)		Midpoint									2023 Guidance
	As of 4/24/23			Key Changes			As of 7/24/23			Range					Midpoint			Certain Completed Items
Sources of capital:
Incremental debt		$	650		$	(15)		$	635		$	560	$	710		$	635
Excess 2022 bond capital held as cash at December 31, 2022		300			—			300			300		300			300			$	300	(1)
Net cash provided by operating activities after dividends		375			—			375			350		400			375
Dispositions and sales of partial interests		1,525			225			1,750			1,650		1,850			1,750			$	701	(2)
Future settlement of forward equity sales agreements outstanding as of December 31, 2022		100			—			100			100		100			100			$	100	(3)
Total sources of capital before excess cash expected to be held at December 31, 2023		$	2,950		$	210		$	3,160		$	2,960	$	3,360		$	3,160
Cash expected to be held at December 31, 2023(4)		$	275		$	—		275			125		425			275
Total sources of capital											$	3,085	$	3,785		$	3,435
Uses of capital:
Construction		$	2,725		$	210		$	2,935		$	2,785	$	3,085		$	2,935
Acquisitions		225			—			225			175		275			225			$	235
Total uses of capital		$	2,950		$	210		$	3,160		$	2,960	$	3,360		$	3,160
Incremental debt (included above):
Issuance of unsecured senior notes payable											$	1,000	$	1,000		$	1,000		$	1,000	(5)
Unsecured senior line of credit, commercial paper, and other											(440)		(290)			(365)
Net incremental debt											$	560	$	710		$	635

(1)Represents $300.0 million of excess 2022 bond capital proceeds held as cash at December 31, 2022, which we used to reduce our 2023 debt capital needs.

(2)In addition to completed transactions, we have pending transactions subject to signed letters of intent or purchase and sale agreements aggregating $175.0 million as of the date of this report.

(3)Represents outstanding forward equity sales agreements to sell 699 thousand shares of common stock under our ATM program entered into during 2022 and expected to be settled during the second half of 2023. Refer to Note 13 – “Stockholders’ equity” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

(4)Represents estimated excess 2023 bond capital proceeds expected to be held as cash at December 31, 2023, which reduces our 2024 debt capital needs.

(5)Represents $1.0 billion of unsecured senior notes payable issued in February 2023. Refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

The key assumptions behind the sources and uses of capital in the table above include favorable real estate and capital market environments, performance of our core operating properties, lease-up and delivery of current and future development and redevelopment projects, and leasing activity. Our expected sources and uses of capital are subject to a number of variables and uncertainties, including those discussed as “Forward-looking statements” under Part I; and “Item 1A. Risk factors” and “Item 7. Management’s discussion and analysis of financial condition and results of operations” of our annual report on Form 10-K for the year ended December 31, 2022; as well as “Item 1A. Risk factors” within “Part II – Other information” of this quarterly report on Form 10-Q. We expect to update our forecast for sources and uses of capital on a quarterly basis.

Sources of capital

Net cash provided by operating activities after dividends

We expect to retain $350.0 million to $400.0 million of net cash flows from operating activities after payment of common stock dividends, and distributions to noncontrolling interests for the year ending December 31, 2023. For purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences. For the year ending December 31, 2023, we expect our recently delivered projects, our highly pre-leased value-creation projects expected to be delivered, and contributions from Same Properties and recently acquired properties to contribute increases in income from rentals, net operating income, and cash flows. We anticipate contractual near-term growth in annual net operating income (cash basis) of $38 million related to the commencement of contractual rents on the projects recently placed into service that are near the end of their initial free rent period. Refer to the “Cash flows” subsection of the “Liquidity” section within this Item 2 for a discussion of cash flows provided by operating activities for the six months ended June 30, 2023.

Debt

We expect to fund a portion of our capital needs for the remainder of 2023 from real estate dispositions, sales of partial interests, strategic real estate joint ventures, settlement of our outstanding forward equity sales agreements, cash on hand, issuances under our commercial paper program, borrowings under our unsecured senior line of credit, and borrowings under our secured construction loans.

In June 2023, we amended our unsecured senior line of credit to increase the aggregate commitments available for borrowing to $5.0 billion from $4.0 billion. As of June 30, 2023, our unsecured senior line of credit has aggregate commitments of $5.0 billion and bears an interest rate of SOFR plus 0.835%. In addition to the cost of borrowing, the unsecured senior line of credit is subject to an annual facility fee of 0.14% based on the aggregate commitments outstanding. Based upon our ability to achieve certain annual sustainability targets, the interest rate and facility fee rate are also subject to upward or downward adjustments of up to four basis points with respect to the interest rate and up to one basis point with respect to the facility fee rate.

During the three months ended March 31, 2023, we achieved certain annual sustainability targets, as described in our unsecured senior line of credit agreement, which reduced the borrowing rate by four basis points for a one-year period to SOFR plus 0.835%, from SOFR plus 0.875%, and reduced the facility fee by one basis point to 0.14% from 0.15%. As of June 30, 2023, we had no outstanding balance on our unsecured senior line of credit.

We established a commercial paper program that provides us with the ability to issue up to $2.0 billion of commercial paper notes with a maturity of generally 30 days or less and with a maximum maturity of 397 days from the date of issuance. Our commercial paper program is backed by our unsecured senior line of credit, and at all times we expect to retain a minimum undrawn amount of borrowing capacity under our unsecured senior line of credit equal to any outstanding balance under our commercial paper program. We use borrowings under the program to fund short-term capital needs. The notes issued under our commercial paper program are sold under customary terms in the commercial paper market. They are typically issued at a discount to par, representing a yield to maturity dictated by market conditions at the time of issuance. In the event we are unable to issue commercial paper notes or refinance outstanding commercial paper notes under terms equal to or more favorable than those under the unsecured senior line of credit, we expect to borrow under the unsecured senior line of credit. The commercial paper notes sold during the six months ended June 30, 2023 were issued at a weighted-average yield to maturity of 5.16%. As of June 30, 2023, we had no outstanding notes under our commercial paper program.

In July 2023, we increased the aggregate amount we may issue from time to time under our commercial paper program to $2.5 billion from $2.0 billion. Refer to Note 16 – “Subsequent event” to our unaudited consolidated financial statements for additional information.

In February 2023, we opportunistically issued $1.0 billion of unsecured senior notes payable with a weighted-average interest rate of 4.95% and a weighted-average maturity of 21.2 years. The unsecured senior notes consisted of $500.0 million of 4.75% green unsecured senior notes due 2035 and $500.0 million of 5.15% unsecured senior notes due 2053.

The following table presents our average debt outstanding and weighted-average interest rates during the three and six months ended June 30, 2023 (dollars in thousands):



	Average Debt Outstanding				Weighted-Average Interest Rate
	June 30, 2023				June 30, 2023
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
Long-term fixed-rate debt	$	11,171,607	$	10,922,407	3.64	%	3.60	%
Short-term variable-rate unsecured senior line of credit and commercial paper program debt	178,744		132,529		5.45		5.43
Blended average interest rate	11,350,351		11,054,936		3.67		3.62
Loan fee amortization and annual facility fee related to unsecured senior line of credit	N/A		N/A		0.10		0.11
Total/weighted average	$	11,350,351	$	11,054,936	3.77	%	3.73	%

Real estate dispositions, sales of partial interests, and issuances of common equity

We expect to continue to focus on the disciplined execution of select sales of real estate. Future sales will provide an important source of capital to fund a portion of pending and recently completed opportunistic acquisitions and our highly leased value-creation development and redevelopment projects, and also provide significant capital for growth. We may also consider additional sales of partial interests in core Class A/A+ properties and/or development projects. For 2023, we expect real estate dispositions, sales of partial interests, and issuances of common equity ranging from $1.8 billion to $2.0 billion. The amount of asset sales necessary to meet our forecasted sources of capital will vary depending upon the amount of EBITDA associated with the assets sold.

As a REIT, we are generally subject to a 100% tax on the net income from real estate asset sales that the IRS characterizes as “prohibited transactions.” We do not expect our sales will be categorized as prohibited transactions. However, unless we meet certain “safe harbor” requirements, whether a real estate asset sale is a “prohibited transaction” will be based on the facts and circumstances of the sale. Our real estate asset sales may not always meet such “safe harbor” requirements. Refer to “Item 1A. Risk factors” of our annual report on Form 10-K for the year ended December 31, 2022 for additional information about the “prohibited transaction” tax.

Common equity transactions

Pursuant to our outstanding forward equity sales agreements, we have the ability to issue an aggregate of 699 thousand shares of common stock and to receive net proceeds of approximately $102.8 million. During the six months ended June 30, 2023, we did not issue shares to settle our outstanding forward equity agreements. In addition, the remaining amount available under our ATM program for future sales of common stock aggregated $141.9 million as of June 30, 2023.

Other sources

Under our current shelf registration statement filed with the SEC, we may offer common stock, preferred stock, debt, and other securities. These securities may be issued, from time to time, at our discretion based on our needs and market conditions, including, as necessary, to balance our use of incremental debt capital.

Additionally, we, together with joint venture partners, hold interests in real estate joint ventures that we consolidate in our financial statements. These existing joint ventures provide significant equity capital to fund a portion of our future construction spend, and our joint venture partners may also contribute equity into these entities for financing-related activities. From July 1, 2023 through December 31, 2026, we expect to receive capital contributions aggregating $1.3 billion from existing real estate joint venture partners to fund construction. During the year ending December 31, 2023, contributions from noncontrolling interests from existing joint venture partners are expected to aggregate $536.0 million.

Uses of capital

Summary of capital expenditures

One of our primary uses of capital relates to the development, redevelopment, pre-construction, and construction of properties. We currently have projects in our value-creation pipeline aggregating 5.3 million RSF of Class A/A+ properties undergoing construction, 9.4 million RSF of near-term and intermediate-term development and redevelopment projects, and 19.1 million SF of future development projects in North America. We incur capitalized construction costs related to development, redevelopment, pre-construction, and other construction activities. We also incur additional capitalized project costs, including interest, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, pre-construction, or construction of a project, during periods when activities necessary to prepare an asset for its intended use are in progress. Refer to “New Class A/A+ development and redevelopment properties: current projects” and “Summary of capital expenditures” subsections of the “Investments in real estate” section within this Item 2 for more information on our capital expenditures.

We capitalize interest cost as a cost of the project only during the period in which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost has been incurred. Capitalized interest for the six months ended June 30, 2023 and 2022 of $178.7 million and $126.0 million, respectively, was classified in investments in real estate in our consolidated balance sheets. The increase in capitalized interest related to the increase in weighted-average interest rate to 3.73% for the six months ended June 30, 2023 from 3.41% for the six months ended June 30, 2022, and the increase in our weighted-average capitalized construction costs to $9.4 billion for the six months ended June 30, 2023 from $7.3 billion for the six months ended June 30, 2022.

Property taxes, insurance on real estate, and indirect project costs, such as construction administration, legal fees, and office costs that clearly relate to projects under development or construction, are capitalized as incurred during the period an asset is undergoing activities to prepare it for its intended use. We capitalized payroll and other indirect costs related to development, redevelopment, pre-construction, and construction projects, aggregating $50.3 million and $43.9 million, and property taxes, insurance on real estate and indirect project costs aggregating $63.0 million and $45.2 million during the six months ended June 30, 2023 and 2022, respectively.

The increase in capitalized costs for the six months ended June 30, 2023, compared to the same period in 2022, was primarily due to an increase in our value-creation pipeline projects undergoing construction and pre-construction activities in 2023 over 2022. Pre-construction activities include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of buildings. Should we cease activities necessary to prepare an asset for its intended use, the interest, taxes, insurance, and certain other direct and indirect project costs related to the asset would be expensed as incurred. Expenditures for repairs and maintenance are expensed as incurred.

Fluctuations in our development, redevelopment, and construction activities could result in significant changes to total expenses and net income. For example, had we experienced a 10% reduction in development, redevelopment, and construction activities without a corresponding decrease in indirect project costs, including interest and payroll, total expenses would have increased by approximately $29.2 million for the six months ended June 30, 2023.

We use third-party brokers to assist in our leasing activity, who are paid on a contingent basis upon successful leasing. We are required to capitalize initial direct costs related to successful leasing transactions that result directly from and are essential to the lease transaction and would not have been incurred had that lease transaction not been successfully executed. During the six months ended June 30, 2023, we capitalized total initial direct leasing costs of $48.7 million. Costs that we incur to negotiate or arrange a lease regardless of its outcome, such as fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs, are expensed as incurred.

Acquisitions

Refer to the “Acquisitions” section in Note 3 – “Investments in real estate” and to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report, and the “Acquisitions” subsection of the “Investments in real estate” section within this Item 2 for information on our acquisitions.

Dividends

During the six months ended June 30, 2023 and 2022, we paid common stock dividends of $418.5 million and $371.5 million, respectively. The increase of $46.9 million in dividends paid on our common stock during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, was primarily due to an increase in the number of common shares outstanding subsequent to January 1, 2022 as a result of issuances of common stock under our ATM program and settlement of forward equity sales agreements, and partially due to the increase in the related dividends to $2.42 per common share paid during the six months ended June 30, 2023 from $2.30 per common share paid during the six months ended June 30, 2022.

Secured notes payable

Secured notes payable as of June 30, 2023 consisted of three notes secured by two properties. Our secured notes payable typically require monthly payments of principal and interest and had a weighted-average interest rate of approximately 8.07%. As of June 30, 2023, the total book value of our investments in real estate securing debt was approximately $273.5 million. As of June 30, 2023, our secured notes payable, including unamortized discounts and deferred financing costs, comprised approximately $649 thousand and $91.3 million of fixed-rate debt and unhedged variable-rate debt, respectively.

Unsecured senior notes payable and unsecured senior line of credit

The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior notes payable as of June 30, 2023 were as follows:


Covenant Ratios(1)	Requirement	June 30, 2023
Total Debt to Total Assets	Less than or equal to 60%	28%
Secured Debt to Total Assets	Less than or equal to 40%	0.2%
Consolidated EBITDA(2) to Interest Expense	Greater than or equal to 1.5x	18.7x
Unencumbered Total Asset Value to Unsecured Debt	Greater than or equal to 150%	345%

(1)All covenant ratio titles utilize terms as defined in the respective debt agreements.

(2)The calculation of consolidated EBITDA is based on the definitions contained in our loan agreements and is not directly comparable to the computation of EBITDA as described in Exchange Act Release No. 47226.

In addition, the terms of the indentures, among other things, limit the ability of the Company, Alexandria Real Estate Equities, L.P., and the Company’s subsidiaries to (i) consummate a merger, or consolidate or sell all or substantially all of the Company’s assets, and (ii) incur certain secured or unsecured indebtedness.

The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior line of credit as of June 30, 2023 were as follows:


Covenant Ratios(1)	Requirement	June 30, 2023
Leverage Ratio	Less than or equal to 60.0%	27.3%
Secured Debt Ratio	Less than or equal to 45.0%	0.2%
Fixed-Charge Coverage Ratio	Greater than or equal to 1.50x	4.24x
Unsecured Interest Coverage Ratio	Greater than or equal to 1.75x	28.01x

(1)All covenant ratio titles utilize terms as defined in the credit agreement.

Estimated interest payments

Estimated interest payments on our fixed-rate debt are calculated based upon contractual interest rates, including interest payment dates and scheduled maturity dates. As of June 30, 2023, 99.2% of our debt was fixed-rate debt. For additional information regarding our debt, refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements under Item 1 of this report.

Ground lease obligations

Operating lease agreements

Ground lease obligations as of June 30, 2023 included leases for 38 of our properties, which accounted for approximately 9% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $6.1 million as of June 30, 2023, our ground lease obligations have remaining lease terms ranging from approximately 30 to 99 years, including available extension options that we are reasonably certain to exercise.

As of June 30, 2023, the remaining contractual payments under ground and office lease agreements in which we are the lessee aggregated $830.9 million and $28.2 million, respectively. We are required to recognize a right-of-use asset and a related liability to account for our future obligations under operating lease arrangements in which we are the lessee. The operating lease liability is measured based on the present value of the remaining lease payments, including payments during the term under our extension options that we are reasonably certain to exercise. The right-of-use asset is equal to the corresponding operating lease liability, adjusted for the initial direct leasing cost and any other consideration exchanged with the landlord prior to the commencement of the lease, as well as adjustments to reflect favorable or unfavorable terms of an acquired lease when compared with market terms at the time of acquisition. As of June 30, 2023, the present value of the remaining contractual payments aggregating $859.1 million under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $386.5 million, which was classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets. As of June 30, 2023, the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 42 years, and the weighted-average discount rate was 4.6%. Our corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $535.3 million. We classify the right-of-use asset in other assets in our consolidated balance sheets. Refer to the “Lease accounting” section in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements under Item 1 in this report for additional information.

Commitments

As of June 30, 2023, remaining aggregate costs under contract for the construction of properties undergoing development, redevelopment, and improvements under the terms of leases approximated $2.4 billion. In addition, we may be required to incur construction costs associated with our future development projects aggregating 643,331 RSF pursuant to an agreement whereby our counterparty may elect to execute future lease agreements on mutually agreeable terms.

We expect payments for these obligations to occur over one to three years, subject to capital planning adjustments from time to time. We may have the ability to cease the construction of certain projects, which would result in the reduction of our commitments. In addition, we have letters of credit and performance obligations aggregating $30.0 million primarily related to construction projects and an anticipated acquisition.

We are committed to funding approximately $413.4 million related to our non-real estate investments. These funding commitments are primarily associated with our investments in privately held entities that report NAV and expire at various dates over the next 12 years, with a weighted-average expiration of 8.4 years as of June 30, 2023.

Exposure to environmental liabilities

In connection with the acquisition of all of our properties, we have obtained Phase I environmental assessments to ascertain the existence of any environmental liabilities or other issues. The Phase I environmental assessments of our properties have not revealed any environmental liabilities that we believe would have a material adverse effect on our financial condition or results of operations taken as a whole, nor are we aware of any material environmental liabilities that have occurred since the Phase I environmental assessments were completed. In addition, we carry a policy of pollution legal liability insurance covering exposure to certain environmental losses at substantially all of our properties.

Foreign currency translation gains and losses

The following table presents the change in accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders during the six months ended June 30, 2023 primarily due to the changes in the foreign exchange rates for our real estate investments in Canada (in thousands). We reclassify unrealized foreign currency translation gains and losses into net income as we dispose of these holdings.


	Total
Balance as of December 31, 2022	$	(20,812)

Other comprehensive income before reclassifications	4,223
Net other comprehensive income	4,223

Balance as of June 30, 2023	$	(16,589)

Inflation

As of June 30, 2023, approximately 93% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent. Approximately 96% of our leases (on an annual rental revenue basis) contained effective annual rent escalations that were either fixed (generally ranging from 3.0% to 3.5%) or indexed based on a consumer price index or other indices. Accordingly, we do not believe that our cash flows or earnings from real estate operations are subject to significant risks from inflation. A period of inflation, however, could cause an increase in the cost of our variable-rate borrowings, including borrowings under our unsecured senior line of credit and commercial paper program, issuances of unsecured senior notes payable, and borrowings under our secured construction loans, and secured loans held by our unconsolidated real estate joint ventures.

In addition, refer to “Item 1A. Risk factors” within “Part II – Other information” in this quarterly report on Form 10-Q for a discussion about risks that inflation directly or indirectly may pose to our business.

Issuer and guarantor subsidiary summarized financial information

Alexandria Real Estate Equities, Inc. (the “Issuer”) has sold certain debt securities registered under the Securities Act of 1933, as amended, that are fully and unconditionally guaranteed by Alexandria Real Estate Equities, L.P. (the “LP” or the “Guarantor Subsidiary”), an indirectly 100% owned subsidiary of the Issuer. The Issuer’s other subsidiaries, including, but not limited to, the subsidiaries that own substantially all of its real estate (collectively, the “Combined Non-Guarantor Subsidiaries”), will not provide a guarantee of such securities, including the subsidiaries that are partially or 100% owned by the LP. The following summarized financial information presents, on a combined basis, balance sheet information as of June 30, 2023 and December 31, 2022, and results of operations and comprehensive income for the six months ended June 30, 2023 and year ended December 31, 2022 for the Issuer and the Guarantor Subsidiary. The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis. In presenting the summarized financial statements, the equity method of accounting has been applied to (i) the Issuer’s interests in the Guarantor Subsidiary, (ii) the Guarantor Subsidiary’s interests in the Combined Non-Guarantor Subsidiaries, and (iii) the Combined Non-Guarantor Subsidiaries’ interests in the Guarantor Subsidiary, where applicable, even though all such subsidiaries meet the requirements to be consolidated under GAAP. All assets and liabilities have been allocated to the Issuer and the Guarantor Subsidiary generally based on legal entity ownership.

The following tables present combined summarized financial information as of June 30, 2023 and December 31, 2022, for the six months ended June 30, 2023, and for the year ended December 31, 2022 for the Issuer and Guarantor Subsidiary. Amounts provided do not represent our total consolidated amounts (in thousands):


	June 30, 2023		December 31, 2022
Assets:
Cash, cash equivalents, and restricted cash	$	592,824	$	465,707
Other assets	116,869		107,287
Total assets	$	709,693	$	572,994

Liabilities:
Unsecured senior notes payable	$	11,091,424	$	10,100,717
Unsecured senior line of credit and commercial paper	—		—
Other liabilities	469,693		466,369
Total liabilities	$	11,561,117	$	10,567,086


	Six Months Ended June 30, 2023		Year Ended December 31, 2022
Total revenues	$	25,968	$	33,052
Total expenses	(128,169)		(277,647)
Net loss	(102,201)		(244,595)
Net income attributable to unvested restricted stock awards	(5,283)		(8,392)
Net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders	$	(107,484)	$	(252,987)

As of June 30, 2023, 402 of our 414 properties were held indirectly by the REIT’s wholly owned consolidated subsidiary, Alexandria Real Estate Equities, L.P.

Critical accounting estimates

Refer to our annual report on Form 10-K for the year ended December 31, 2022 for a discussion of our critical accounting estimates related to recognition of real estate acquired, impairment of long-lived assets, monitoring of tenant credit quality, and allowance for credit losses.

Non-GAAP measures and definitions

This section contains additional information of certain non-GAAP financial measures and the reasons why we use these supplemental measures of performance and believe they provide useful information to investors, as well as the definitions of other terms used in this report.

Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

GAAP-basis accounting for real estate assets utilizes historical cost accounting and assumes that real estate values diminish over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Nareit Board of Governors established funds from operations as an improved measurement tool. Since its introduction, funds from operations has become a widely used non-GAAP financial measure among equity REITs. We believe that funds from operations is helpful to investors as an additional measure of the performance of an equity REIT. Moreover, we believe that funds from operations, as adjusted, allows investors to compare our performance to the performance of other real estate companies on a consistent basis, without having to account for differences recognized because of real estate acquisition and disposition decisions, financing decisions, capital structure, capital market transactions, variances resulting from the volatility of market conditions outside of our control, or other corporate activities that may not be representative of the operating performance of our properties.

The 2018 White Paper published by the Nareit Board of Governors (the “Nareit White Paper”) defines funds from operations as net income (computed in accordance with GAAP), excluding gains or losses on sales of real estate, and impairments of real estate, plus depreciation and amortization of operating real estate assets, and after adjustments for our share of consolidated and unconsolidated partnerships and real estate joint ventures. Impairments represent the write-down of assets when fair value over the recoverability period is less than the carrying value due to changes in general market conditions and do not necessarily reflect the operating performance of the properties during the corresponding period.

We compute funds from operations, as adjusted, as funds from operations calculated in accordance with the Nareit White Paper, excluding significant gains, losses, and impairments realized on non-real estate investments, unrealized gains or losses on non-real estate investments, gains or losses on early extinguishment of debt, significant termination fees, acceleration of stock compensation expense due to the resignation of an executive officer, deal costs, the income tax effect related to such items, and the amount of such items that is allocable to our unvested restricted stock awards. We compute the amount that is allocable to our unvested restricted stock awards using the two-class method. Under the two-class method, we allocate net income (after amounts attributable to noncontrolling interests) to common stockholders and to unvested restricted stock awards by applying the respective weighted-average shares outstanding during each quarter-to-date and year-to-date period. This may result in a difference of the summation of the quarter-to-date and year-to-date amounts. Neither funds from operations nor funds from operations, as adjusted, should be considered as alternatives to net income (determined in accordance with GAAP) as indications of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as measures of liquidity, nor are they indicative of the availability of funds for our cash needs, including our ability to make distributions.

The following table reconciles net income to funds from operations for the share of consolidated real estate joint ventures attributable to noncontrolling interests and our share of unconsolidated real estate joint ventures for the three and six months ended June 30, 2023 (in thousands):



	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures				Our Share of Unconsolidated Real Estate Joint Ventures
	June 30, 2023				June 30, 2023
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
Net income	$	43,768	$	87,599	$	181	$	375
Depreciation and amortization of real estate assets	28,220		56,398		855		1,714

Funds from operations	$	71,988	$	143,997	$	1,036	$	2,089

The following tables present a reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, and funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted, and the related per share amounts for the three and six months ended June 30, 2023 and 2022 (in thousands, except per share amounts). Per share amounts may not add due to rounding.


	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023		2022
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic and diluted	$	87,260		$	269,280	$	162,516	$	118,511
Depreciation and amortization of real estate assets	270,026			238,565		532,150		475,725
Noncontrolling share of depreciation and amortization from consolidated real estate JVs	(28,220)			(26,418)		(56,398)		(50,099)
Our share of depreciation and amortization from unconsolidated real estate JVs	855			934		1,714		1,889
Gain on sales of real estate	(214,810)			(214,219)		(214,810)		(214,219)
Impairment of real estate – rental properties	166,602		(1)	—		166,602		—
Allocation to unvested restricted stock awards	(872)			—		(2,220)		—
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted(2)	280,841			268,142		589,554		331,807
Unrealized losses on non-real estate investments	77,897			68,128		143,752		331,561
Impairment of non-real estate investments	22,953		(3)	—		22,953		—
Impairment of real estate	1,973			—		1,973		—
Loss on early extinguishment of debt	—			3,317		—		3,317
Allocation to unvested restricted stock awards	(1,285)			(778)		(2,164)		(3,264)
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted	$	382,379		$	338,809	$	756,068	$	663,421

(1)Refer to the “Sales of real estate assets and impairment charges” section in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

(2)Calculated in accordance with standards established by the Nareit Board of Governors.

(3)Primarily related to three non-real estate investments in privately held entities that do not report NAV.


	Three Months Ended June 30,				Six Months Ended June 30,
(Per share)	2023		2022		2023		2022
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted	$	0.51	$	1.67	$	0.95	$	0.74
Depreciation and amortization of real estate assets	1.42		1.32		2.80		2.68
Gain on sales of real estate	(1.26)		(1.33)		(1.26)		(1.34)
Impairment of real estate – rental properties	0.98		—		0.98		—
Allocation to unvested restricted stock awards	(0.01)		—		(0.02)		—
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted	1.64		1.66		3.45		2.08
Unrealized losses on non-real estate investments	0.46		0.42		0.84		2.07
Impairment of non-real estate investments	0.13		—		0.13		—
Impairment of real estate	0.02		—		0.02		—
Loss on early extinguishment of debt	—		0.02		—		0.02
Allocation to unvested restricted stock awards	(0.01)		—		(0.01)		(0.02)
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted	$	2.24	$	2.10	$	4.43	$	4.15

Weighted-average shares of common stock outstanding – diluted(1)	170,864		161,412		170,824		159,814

(1)Refer to the definition of “Weighted-average shares of common stock outstanding – diluted” in this section within this Item 2 for additional information.

Adjusted EBITDA and Adjusted EBITDA margin

We use Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization (“EBITDA”), excluding stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, impairments of real estate, and significant termination fees. Adjusted EBITDA also excludes unrealized gains or losses and significant realized gains or losses and impairments that result from our non-real estate investments. These non-real estate investment amounts are classified in our consolidated statements of operations outside of total revenues.

We believe Adjusted EBITDA provides investors with relevant and useful information as it allows investors to evaluate the operating performance of our business activities without having to account for differences recognized because of investing and financing decisions related to our real estate and non-real estate investments, our capital structure, capital market transactions, and variances resulting from the volatility of market conditions outside of our control. For example, we exclude gains or losses on the early extinguishment of debt to allow investors to measure our performance independent of our indebtedness and capital structure. We believe that adjusting for the effects of impairments and gains or losses on sales of real estate, significant impairments and realized gains or losses on non-real estate investments, and significant termination fees allows investors to evaluate performance from period to period on a consistent basis without having to account for differences recognized because of investing and financing decisions related to our real estate and non-real estate investments or other corporate activities that may not be representative of the operating performance of our properties.

In addition, we believe that excluding charges related to stock compensation and unrealized gains or losses facilitates for investors a comparison of our business activities across periods without the volatility resulting from market forces outside of our control. Adjusted EBITDA has limitations as a measure of our performance. Adjusted EBITDA does not reflect our historical expenditures or future requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant measure of performance, it does not represent net income (loss) or cash flows from operations calculated and presented in accordance with GAAP, and it should not be considered as an alternative to those indicators in evaluating performance or liquidity.

In order to calculate the Adjusted EBITDA margin, we divide Adjusted EBITDA by total revenues as presented in our consolidated statements of operations. We believe that this supplemental performance measure provides investors with additional useful information regarding the profitability of our operating activities.

The following table reconciles net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA and calculates the Adjusted EBITDA margin for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	133,705	$	309,382	$	255,398	$	191,990
Interest expense	17,072		24,257		30,826		53,697
Income taxes	2,251		2,089		3,382		5,660
Depreciation and amortization	273,555		242,078		538,857		482,737
Stock compensation expense	15,492		14,340		31,978		28,368
Loss on early extinguishment of debt	—		3,317		—		3,317
Gain on sales of real estate	(214,810)		(214,219)		(214,810)		(214,219)
Unrealized losses on non-real estate investments	77,897		68,128		143,752		331,561
Impairment of real estate	168,575		—		168,575		—
Impairment of non-real estate investments	22,953		—		22,953		—
Adjusted EBITDA	$	496,690	$	449,372	$	980,911	$	883,111

Total revenues	$	713,900	$	643,764	$	1,414,695	$	1,258,829

Adjusted EBITDA margin	70%		70%		69%		70%

Annual rental revenue

Annual rental revenue represents the annualized fixed base rental obligations, calculated in accordance with GAAP, for leases in effect as of the end of the period, related to our operating RSF. Annual rental revenue is presented using 100% of the annual rental revenue from our consolidated properties and our share of annual rental revenue for our unconsolidated real estate joint ventures. Annual rental revenue per RSF is computed by dividing annual rental revenue by the sum of 100% of the RSF of our consolidated properties and our share of the RSF of properties held in unconsolidated real estate joint ventures. As of June 30, 2023, approximately 93% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent. Annual rental revenue excludes these operating expenses recovered from our tenants. Amounts recovered from our tenants related to these operating expenses, along with base rent, are classified in income from rentals in our consolidated statements of operations.

Capitalization rates

Capitalization rates are calculated based on net operating income and net operating income (cash basis) annualized, excluding lease termination fees, for the quarter preceding the date on which the property is sold, or near-term prospective net operating income.

Capitalized interest

We capitalize interest cost as a cost of a project during periods for which activities necessary to develop or redevelop a project for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost has been incurred. Activities necessary to develop or redevelop a project include pre-construction activities such as entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of buildings. If we cease activities necessary to prepare a project for its intended use, interest costs related to such project are expensed as incurred.

Cash interest

Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts). Refer to the definition of “Fixed-charge coverage ratio” in this section within this Item 2 for a reconciliation of interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest.

Class A/A+ properties and AAA locations

Class A/A+ properties are properties clustered in AAA locations that provide innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Class A/A+ properties generally command higher annual rental rates than other classes of similar properties.

AAA locations are in close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses. Such locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space.

Construction costs related to active development and redevelopment projects under contract

Includes (i) costs incurred to date, (ii) remaining costs to complete under a general contractor’s guaranteed maximum price (“GMP”) construction contract or other fixed contracts, and (iii) our maximum committed tenant improvement allowances under our executed leases. The general contractor’s GMP contract or other fixed contracts reduce our exposure to costs of construction materials, labor, and services from third-party contractors and suppliers, unless the overruns result from, among other things, a force majeure event or a change in the scope of work covered by the contract.

Development, redevelopment, and pre-construction

A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new Class A/A+ properties, and property enhancements identified during the underwriting of certain acquired properties, located in collaborative life science, agtech, and advanced technology campuses in AAA innovation clusters. These projects are generally focused on providing high-quality, generic, and reusable spaces that meet the real estate requirements of, and are reusable by, a wide range of tenants. Upon completion, each value-creation project is expected to generate increases in rental income, net operating income, and cash flows. Our development and redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

Development projects generally consist of the ground-up development of generic and reusable facilities. Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into laboratory, agtech, or tech space. We generally will not commence new development projects for aboveground construction of new Class A/A+ laboratory, agtech, and tech space without first securing significant pre-leasing for such space, except when there is solid market demand for high-quality Class A/A+ properties.

Pre-construction activities include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of buildings. Ultimately, these projects will provide high-quality facilities and are expected to generate significant revenue and cash flows.

Development, redevelopment, and pre-construction spending also includes the following costs: (i) amounts to bring certain acquired properties up to market standard and/or other costs identified during the acquisition process (generally within two years of acquisition) and (ii) permanent conversion of space for highly flexible, move-in-ready laboratory space to foster the growth of promising early- and growth-stage life science companies.

Revenue-enhancing and repositioning capital expenditures represent spending to reposition or significantly change the use of a property, including through improvement in the asset quality from Class B to Class A/A+.

Non-revenue-enhancing capital expenditures represent costs required to maintain the current revenues of a stabilized property, including the associated costs for renewed and re-leased space.

Fixed-charge coverage ratio

Fixed-charge coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to fixed charges. We believe that this ratio is useful to investors as a supplemental measure of our ability to satisfy fixed financing obligations and preferred stock dividends. Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts).

The following table reconciles interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest and fixed charges and computes the fixed-charge coverage ratio for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Adjusted EBITDA	$	496,690	$	449,372	$	980,911	$	883,111

Interest expense	$	17,072	$	24,257	$	30,826	$	53,697
Capitalized interest	91,674		68,202		178,744		125,965
Amortization of loan fees	(3,729)		(3,236)		(7,368)		(6,339)
Amortization of debt (discounts) premiums	(304)		(267)		(592)		157
Cash interest and fixed charges	$	104,713	$	88,956	$	201,610	$	173,480

Fixed-charge coverage ratio:
– period annualized	4.7x		5.1x		4.9x		5.1x
– trailing 12 months	4.9x		5.1x		4.9x		5.1x

Gross assets

Gross assets are calculated as total assets plus accumulated depreciation as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Total assets	$	36,659,257	$	35,523,399
Accumulated depreciation	4,646,833		4,354,063
Gross assets	$	41,306,090	$	39,877,462

Initial stabilized yield (unlevered)

Initial stabilized yield is calculated as the estimated amounts of net operating income at stabilization divided by our investment in the property. Our initial stabilized yield excludes the benefit of leverage. Our cash rents related to our value-creation projects are generally expected to increase over time due to contractual annual rent escalations. Our estimates for initial stabilized yields, initial stabilized yields (cash basis), and total costs at completion represent our initial estimates at the commencement of the project. We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.

Initial stabilized yield reflects rental income, including contractual rent escalations and any rent concessions over the term(s) of the lease(s), calculated on a straight-line basis.
Initial stabilized yield (cash basis) reflects cash rents at the stabilization date after initial rental concessions, if any, have elapsed and our total cash investment in the property.

Investment-grade or publicly traded large cap tenants

Investment-grade or publicly traded large cap tenants represent tenants that are investment-grade rated or publicly traded companies with an average daily market capitalization greater than $10 billion for the twelve months ended June 30, 2023, as reported by Bloomberg Professional Services. Credit ratings from Moody’s Investors Service and S&P Global Ratings reflect credit ratings of the tenant’s parent entity, and there can be no assurance that a tenant’s parent entity will satisfy the tenant’s lease obligation upon such tenant’s default. We monitor the credit quality and related material changes of our tenants. Material changes that cause a tenant’s market capitalization to decrease below $10 billion, which are not immediately reflected in the twelve-month average, may result in their exclusion from this measure.

Investments in real estate – our value-creation pipeline of new Class A/A+ development and redevelopment projects as a percentage of gross assets

The following table presents our value-creation pipeline of new Class A/A+ development and redevelopment projects as a percentage of gross assets as of June 30, 2023:


	Percentage of Gross Assets
Under construction projects 70% leased/negotiating		10%
Near-term projects expected to commence construction in the next three quarters 71% leased		1%
Income-producing/potential cash flows/covered land play(1)		8%
Land		3%

(1)Includes projects with existing buildings that are generating or can generate operating cash flows. Also includes development rights associated with existing operating campuses. These projects aggregated 1.1% of total annual rental revenue as of June 30, 2023 and are included in our industry mix chart as targeted for a future change in use. Refer to “High-quality and diverse client base in AAA locations” section within this Item 2 for additional information.

Investments in real estate – value-creation square footage currently in rental properties

The square footage presented in the table below is classified as operating as of June 30, 2023. These lease expirations or vacant space at recently acquired properties represent future opportunities for which we have the intent, subject to market conditions and leasing, to commence first-time conversion from non-laboratory space to laboratory space, or to commence future ground-up development:


	Dev/Redev		RSF of Lease Expirations Targeted for Development and Redevelopment
Property/Submarket		2023		2024		Thereafter(1)		Total
Near-term projects:
311 Arsenal Street/Cambridge/Inner Suburbs	Redev		—		308,446		—		308,446
401 Park Drive/Fenway	Redev		111,294		—		—		111,294
269 East Grand Avenue/South San Francisco	Redev		—		107,250		—		107,250
3301 Monte Villa Parkway/Bothell	Redev		—		50,552		—		50,552
			111,294		466,248		—		577,542
Intermediate-term projects:
100 Edwin H. Land Boulevard/Cambridge	Dev		—		104,500		—		104,500
219 East 42nd Street/New York City	Dev		—		—		349,947		349,947
10975 and 10995 Torreyana Road/Torrey Pines	Dev		—		84,829		—		84,829
			—		189,329		349,947		539,276
Future projects:
446, 458, 500, and 550 Arsenal Street/Cambridge/Inner Suburbs	Dev		—		—		392,583		392,583
380 and 420 E Street/Seaport Innovation District	Dev		—		—		195,506		195,506
Other/Greater Boston	Redev		—		—		167,549		167,549
1122 and 1150 El Camino Real/South San Francisco	Dev		—		—		375,232		375,232
3875 Fabian Way/Greater Stanford	Dev		—		—		228,000		228,000
960 Industrial Road/Greater Stanford	Dev		—		—		110,000		110,000
Campus Point by Alexandria/University Town Center	Dev		—		495,192		—		495,192
Sequence District by Alexandria/Sorrento Mesa	Dev/Redev		—		—		684,866		684,866
10256 Meanley Drive/Sorrento Mesa	Dev		54,664		—		—		54,664
830 4th Avenue South/SoDo	Dev		—		—		42,380		42,380
Other/Seattle	Dev		—		—		102,437		102,437
1020 Red River Street/Austin	Redev		—		—		126,034		126,034
Canada	Redev		—		—		247,743		247,743
			54,664		495,192		2,672,330		3,222,186
			165,958		1,150,769		3,022,277		4,339,004

(1)Includes vacant square footage as of June 30, 2023.

Joint venture financial information

We present components of balance sheet and operating results information related to our real estate joint ventures, which are not presented, or intended to be presented, in accordance with GAAP. We present the proportionate share of certain financial line items as follows: (i) for each real estate joint venture that we consolidate in our financial statements, which are controlled by us through contractual rights or majority voting rights, but of which we own less than 100%, we apply the noncontrolling interest economic ownership percentage to each financial item to arrive at the amount of such cumulative noncontrolling interest share of each component presented; and (ii) for each real estate joint venture that we do not control and do not consolidate, and are instead controlled jointly or by our joint venture partners through contractual rights or majority voting rights, we apply our economic ownership percentage to each financial item to arrive at our proportionate share of each component presented.

The components of balance sheet and operating results information related to our real estate joint ventures do not represent our legal claim to those items. For each entity that we do not wholly own, the joint venture agreement generally determines what equity holders can receive upon capital events, such as sales or refinancing, or in the event of a liquidation. Equity holders are normally entitled to their respective legal ownership of any residual cash from a joint venture only after all liabilities, priority distributions, and claims have been repaid or satisfied.

We believe that this information can help investors estimate the balance sheet and operating results information related to our partially owned entities. Presenting this information provides a perspective not immediately available from consolidated financial statements and one that can supplement an understanding of the joint venture assets, liabilities, revenues, and expenses included in our consolidated results.

The components of balance sheet and operating results information related to our real estate joint ventures are limited as an analytical tool as the overall economic ownership interest does not represent our legal claim to each of our joint ventures’ assets, liabilities, or results of operations. In addition, joint venture financial information may include financial information related to the unconsolidated real estate joint ventures that we do not control. We believe that in order to facilitate for investors a clear understanding of our operating results and our total assets and liabilities, joint venture financial information should be examined in conjunction with our consolidated statements of operations and balance sheets. Joint venture financial information should not be considered an alternative to our consolidated financial statements, which are presented and prepared in accordance with GAAP.

Mega campus

Mega campuses are cluster campuses that consist of approximately 1 million RSF or more, including operating, active development/redevelopment, and land RSF less operating RSF expected to be demolished. The following table reconciles our annual rental revenue as of June 30, 2023 (in thousands):


	Annual Rental Revenue
Mega campus	$	1,510,039
Non-mega campus	495,580
Total	$	2,005,619

Mega campus annual rental revenue as a percentage of total annual rental revenue	75		%

Net cash provided by operating activities after dividends

Net cash provided by operating activities after dividends includes the deduction for distributions to noncontrolling interests. For purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences.

Net debt and preferred stock to Adjusted EBITDA

Net debt and preferred stock to Adjusted EBITDA is a non-GAAP financial measure that we believe is useful to investors as a supplemental measure of evaluating our balance sheet leverage. Net debt and preferred stock is equal to the sum of total consolidated debt less cash, cash equivalents, and restricted cash, plus preferred stock outstanding as of the end of the period. Refer to the definition of “Adjusted EBITDA and Adjusted EBITDA margin” within this section of this Item 2 for further information on the calculation of Adjusted EBITDA.

The following table reconciles debt to net debt and preferred stock and computes the ratio to Adjusted EBITDA as of June 30, 2023 and December 31, 2022 (dollars in thousands):


	June 30, 2023			December 31, 2022
Secured notes payable	$	91,939		$	59,045
Unsecured senior notes payable	11,091,424			10,100,717
Unsecured senior line of credit and commercial paper	—			—
Unamortized deferred financing costs	80,663			74,918
Cash and cash equivalents	(924,370)			(825,193)
Restricted cash	(35,920)			(32,782)
Preferred stock	—			—
Net debt and preferred stock	$	10,303,736		$	9,376,705

Adjusted EBITDA:
– quarter annualized	$	1,986,760		$	1,846,936
– trailing 12 months	$	1,895,336		$	1,797,536

Net debt and preferred stock to Adjusted EBITDA:
– quarter annualized	5.2		x	5.1		x
– trailing 12 months	5.4		x	5.2		x

Net operating income, net operating income (cash basis), and operating margin

The following table reconciles net income to net operating income and net operating income (cash basis) and computes operating margin for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	133,705	$	309,382	$	255,398	$	191,990

Equity in earnings of unconsolidated real estate joint ventures	(181)		(213)		(375)		(433)
General and administrative expenses	45,882		43,397		94,078		84,328
Interest expense	17,072		24,257		30,826		53,697
Depreciation and amortization	273,555		242,078		538,857		482,737
Impairment of real estate	168,575		—		168,575		—
Loss on early extinguishment of debt	—		3,317		—		3,317
Gain on sales of real estate	(214,810)		(214,219)		(214,810)		(214,219)
Investment loss	78,268		39,481		123,379		279,800
Net operating income	502,066		447,480		995,928		881,217
Straight-line rent revenue	(29,335)		(27,362)		(62,526)		(69,387)
Amortization of acquired below-market leases	(24,789)		(16,760)		(46,425)		(30,675)
Net operating income (cash basis)	$	447,942	$	403,358	$	886,977	$	781,155

Net operating income (cash basis) – annualized	$	1,791,768	$	1,613,432	$	1,773,954	$	1,562,310

Net operating income (from above)	$	502,066	$	447,480	$	995,928	$	881,217
Total revenues	$	713,900	$	643,764	$	1,414,695	$	1,258,829
Operating margin	70%		70%		70%		70%

Net operating income is a non-GAAP financial measure calculated as net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding equity in the earnings of our unconsolidated real estate joint ventures, general and administrative expenses, interest expense, depreciation and amortization, impairments of real estate, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and investment income or loss. We believe net operating income provides useful information to investors regarding our financial condition and results of operations because it primarily reflects those income and expense items that are incurred at the property level. Therefore, we believe net operating income is a useful measure for investors to evaluate the operating performance of our consolidated real estate assets. Net operating income on a cash basis is net operating income adjusted to exclude the effect of straight-line rent and amortization of acquired above- and below-market lease revenue adjustments required by GAAP. We believe that net operating income on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent revenue and the amortization of acquired above- and below-market leases.

Furthermore, we believe net operating income is useful to investors as a performance measure of our consolidated properties because, when compared across periods, net operating income reflects trends in occupancy rates, rental rates, and operating costs, which provide a perspective not immediately apparent from net income or loss. Net operating income can be used to measure the initial stabilized yields of our properties by calculating net operating income generated by a property divided by our investment in the property. Net operating income excludes certain components from net income in order to provide results that are more closely related to the results of operations of our properties. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level rather than at the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort comparability of operating performance at the property level. Impairments of real estate have been excluded in deriving net operating income because we do not consider impairments of real estate to be property-level operating expenses. Impairments of real estate relate to changes in the values of our assets and do not reflect the current operating performance with respect to related revenues or expenses. Our impairments of real estate represent the write-down in the value of the assets to the estimated fair value less cost to sell. These impairments result from investing decisions or a deterioration in market conditions. We also exclude realized and unrealized investment gain or loss, which results from investment decisions that occur at the corporate level related to non-real estate investments in publicly traded companies and certain privately held entities. Therefore, we do not consider these activities to be an indication of operating performance of our real estate assets at the property level. Our calculation of net operating income also excludes charges incurred from changes in certain financing decisions, such as losses on early extinguishment of debt, as these charges often relate to corporate strategy. Property operating expenses included in determining net operating income primarily consist of costs that are related to our operating properties, such as utilities, repairs, and maintenance; rental expense related to ground leases; contracted services, such as janitorial, engineering, and landscaping; property taxes and insurance; and property-level salaries. General and administrative expenses consist primarily of accounting and corporate compensation, corporate insurance, professional fees, office rent, and office supplies that are incurred as part of corporate office management. We calculate operating margin as net operating income divided by total revenues.

We believe that in order to facilitate for investors a clear understanding of our operating results, net operating income should be examined in conjunction with net income or loss as presented in our consolidated statements of operations. Net operating income should not be considered as an alternative to net income or loss as an indication of our performance, nor as an alternative to cash flows as a measure of our liquidity or our ability to make distributions.

Operating statistics

We present certain operating statistics related to our properties, including number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations as of the end of the period. We believe these measures are useful to investors because they facilitate an understanding of certain trends for our properties. We compute the number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations at 100% for all properties in which we have an investment, including properties owned by our consolidated and unconsolidated real estate joint ventures. For operating metrics based on annual rental revenue, refer to the definition of “Annual rental revenue” in this “Non-GAAP measures and definitions” section within this Item 2.

Same property comparisons

As a result of changes within our total property portfolio during the comparative periods presented, including changes from assets acquired or sold, properties placed into development or redevelopment, and development or redevelopment properties recently placed into service, the consolidated total income from rentals, as well as rental operating expenses in our operating results, can show significant changes from period to period. In order to supplement an evaluation of our results of operations over a given quarterly or annual period, we analyze the operating performance for all consolidated properties that were fully operating for the entirety of the comparative periods presented, referred to as same properties. We separately present quarterly and year-to-date same property results to align with the interim financial information required by the SEC in our management’s discussion and analysis of our financial condition and results of operations. These same properties are analyzed separately from properties acquired subsequent to the first day in the earliest comparable quarterly or year-to-date period presented, properties that underwent development or redevelopment at any time during the comparative periods, unconsolidated real estate joint ventures, properties classified as held for sale, and corporate entities (legal entities performing general and administrative functions), which are excluded from same property results. Additionally, termination fees, if any, are excluded from the results of same properties. Refer to the “Same properties” subsection in the “Results of operations” section within this Item 2 for additional information.

Stabilized occupancy date

The stabilized occupancy date represents the estimated date on which the project is expected to reach occupancy of 95% or greater.

Tenant recoveries

Tenant recoveries represent revenues comprising reimbursement of real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses and earned in the period during which the applicable expenses are incurred and the tenant’s obligation to reimburse us arises.

We classify rental revenues and tenant recoveries generated through the leasing of real estate assets within revenues in income from rentals in our consolidated statements of operations. We provide investors with a separate presentation of rental revenues and tenant recoveries in the “Comparison of results for the three months ended June 30, 2023 to the three months ended June 30, 2022” subsection of the “Results of operations” section within this Item 2 because we believe it promotes investors’ understanding of our operating results. We believe that the presentation of tenant recoveries is useful to investors as a supplemental measure of our ability to recover operating expenses under our triple net leases, including recoveries of utilities, repairs and maintenance, insurance, property taxes, common area expenses, and other operating expenses, and of our ability to mitigate the effect to net income for any significant variability to components of our operating expenses.

The following table reconciles income from rentals to tenant recoveries for the three and six months ended June 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Income from rentals	$	704,339	$	640,959	$	1,392,288	$	1,253,513
Rental revenues	(537,889)		(485,067)		(1,056,191)		(954,604)
Tenant recoveries	$	166,450	$	155,892	$	336,097	$	298,909

Total equity capitalization

Total equity capitalization is equal to the outstanding shares of common stock multiplied by the closing price on the last trading day at the end of each period presented.

Total market capitalization

Total market capitalization is equal to the sum of total equity capitalization and total debt.

Unencumbered net operating income as a percentage of total net operating income

Unencumbered net operating income as a percentage of total net operating income is a non-GAAP financial measure that we believe is useful to investors as a performance measure of the results of operations of our unencumbered real estate assets as it reflects those income and expense items that are incurred at the unencumbered property level. Unencumbered net operating income is derived from assets classified in continuing operations, which are not subject to any mortgage, deed of trust, lien, or other security interest, as of the period for which income is presented.

The following table summarizes unencumbered net operating income as a percentage of total net operating income for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Unencumbered net operating income	$	500,923	$	446,473	$	993,783	$	867,433
Encumbered net operating income	1,143		1,007		2,145		13,784
Total net operating income	$	502,066	$	447,480	$	995,928	$	881,217
Unencumbered net operating income as a percentage of total net operating income	100%		100%		100%		98%

Weighted-average shares of common stock outstanding – diluted

From time to time, we enter into capital market transactions, including forward equity sales agreements (“Forward Agreements”), to fund acquisitions, to fund construction of our highly leased development and redevelopment projects, and for general working capital purposes. We are required to consider the potential dilutive effect of our Forward Agreements under the treasury stock method while the Forward Agreements are outstanding. As of June 30, 2023, we had Forward Agreements outstanding to sell an aggregate of 699 thousand shares of common stock. Refer to Note 13 – “Stockholders’ equity” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

The weighted-average shares of common stock outstanding used in calculating EPS – diluted, funds from operations per share – diluted, and funds from operations per share – diluted, as adjusted, for the three and six months ended June 30, 2023 and 2022 are calculated as follows. Also shown are the weighted-average unvested shares associated with restricted stock awards used in calculating the amounts allocable to unvested stock award holders for each of the respective periods presented below (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Basic shares for earnings per share	170,864	161,412	170,824	159,814
Forward Agreements	—	—	—	—
Diluted shares for earnings per share	170,864	161,412	170,824	159,814

Basic shares for funds from operations per share and funds from operations per share, as adjusted	170,864	161,412	170,824	159,814
Forward Agreements	—	—	—	—
Diluted shares for funds from operations per share and funds from operations per share, as adjusted	170,864	161,412	170,824	159,814

Weighted-average unvested restricted shares used in the allocations of net income, funds from operations, and funds from operations, as adjusted	2,163	1,806	2,219	1,816

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